iShares launches swap-based ETF platform
Dubai, October 25, 2010
iShares, the exchange traded funds (ETF) platform of US-based BlackRock, has set new standard for ETF transparency with the launch of an unique swap-based ETF platform.
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide.
Announcing an evolution in the ETF industry, iShares said its ETF platform will deliver a range of swap-based ETFs which offer multiple swap counterparties and are over collateralised and provide investors with full transparency regarding collateral holdings, swap costs and fund exposures.
This development is in response to the rapidly growing appetite for exposure to difficult to access markets, combined with a desire for transparency, disclosure and minimised counterparty risk.
The first products to roll off the platform will provide exposure to Russia and India, said a top official.
Robert Broadwell, vice president, iShares, said: 'This initiative is an important expansion of the iShares product set and reinforces our position as the market leader in one of the fastest growing areas of fund management.'
'iShares remains committed to its physically-backed ETF structure offering, which we believe continues to be the most effective and efficient way for investors, local as well as global, to access mainstream asset classes, and will always be our first option when launching products,' he explained.
To facilitate the Russia and India funds, there will be three counterparties including RBS, UBS and Credit Suisse. iShares believes the risk management benefits and competitive swap pricing of having multiple swap providers is of paramount importance to investors.
“We are delighted to have RBS, UBS and Credit Suisse act as swap counterparties to the new funds and plan to add further counterparties over time,” Broadwell added.
According to him, iShares’ unique approach will deliver access to markets and asset classes via swaps which can be difficult to otherwise access due to operational or liquidity constraints, whilst maintaining a commitment to transparency, quality of service and risk management.
'Counterparty risk and transparency have been the driving concerns for investors using swap-based ETF structures,' Broadwell added.
Considering this, iShares has engineered an enhanced platform following a unique model which, coupled with an over collateralised and highly transparent fund structure, helps to significantly minimise counterparty risk for investors.
'We take our responsibility as the world’s largest fiduciary, investment and risk manager very seriously, and believe in providing the highest levels of transparency to our clients.'
'Both regulators and product providers are working towards a mutual goal - increased transparency of products, models and methodologies – to satisfy investor demand for transparent financial instruments,' he added.-TradeArabia News Service