The world's largest fund manager, BlackRock, has made plans to issue the very first cross border exchange traded fund in Europe. The hedge fund firm's move is expected to lower overall trading costs as well as attract more investors to place their money into the product.
Exchange traded funds or ETF's would follow baskets of shares, bonds and other financial instruments and are traded at the bourse in the same manner as stocks. These instruments provide access to indices without the need to purchase the securities they represent.
Currently. ETF's in Europe are issued and traded in one or more national bourses. These trades are then paid for in the national securities depositories of the country where the said trade was executed.
Should an investor in one nation wants to sell or purchase an ETF that is listedin another country's stock exchange, the investor should have depositary accounts in the buying country and the selling country. The accounts in both countries are updated with any changes in the ETF positions as well as comply with post-trading rules in both countries.
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