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BATS, BlackRock Start Europe Cross-Border ETF Exchange


In the close-knit European Union, exchange traded fund providers are required to list products on multiple exchanges. However, BATS Chi-X Europe is trying the rectify the fragmentation issue through a pan-European listing model.

BATS Chi-X Europe launched its pan-European listings business Tuesday, with initial ETFs iShares MSCI Emerging Markets UCITS ETF (IEEM) and iShares MSCI World Minimum Volatility UCITS ETF (MVOL) to start trading in November 2013 as secondary listings, according to a press release.

Many European countries require issuers to acquire local listings before their ETFs are able to trade within the country, the Wall street Journal reports.

Mark Hemsley, chief executive of Bats Chi-X Europe, believes Bats Chi-X Europe will help solve the issue of “fragmentation, transparency and liquidity.”

“We have come up with a pan-European listings model for the ETF market, which will help to resolve the issues of having several listings across jurisdictions, improve liquidity in specific products and offer a single clearing and settlement model,” Hemsley said in the WSJ article.

Moreover, BATS will employ the Competitive Liquidity Provider program to incentivise market makers, or authorized participants, to augment liquidity in ETFs on the exchange – market makers help create and redeem ETF shares. [Exchanges Ready Incentive Programs to Boost ETF Liquidity]

Through the BlackRock (BLK) iShares ETF listings, BATS Chi-X Europe hopes to bring in a high-profile endorsement for the exchange.

“This is a ‘let’s see if we can introduce something innovative to the market in the hopes of growing the market and simplifying the trading environment,’” Leland Clemons, head of capital markets EMEA for iShares, said in the article.

For more information on the ETF industry, visit our current affairs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.