The European exchange traded products (ETP) market is seeing a widespread shift to the International Central Securities Depositary (ICSD) model. Brexit prompted the migration of Irish-domiciled ETFs to Euroclear Bank in Belgium and Clearstream Banking Luxembourg. Now, the market has taken note.
Migration to ICSDs has gone smoothly. Market participants have recognised the benefits of the ICSD model for cross-exchange listed ETPs in Europe, especially the lowered operational overhead and reduced trading and settlement risk.
The ETP market continues to evolve, with innovations such as ETNs, ETCs, and ‘green’ ETFs, and a greater desire to expand global distribution.
As a result, as much as 90% of the market may use international settlement within a few years.
BNY Mellon has collated insights from Corporate Trust experts as well as the ICSDs and HANetf to explore this trend and its impact on Europe’s ETP market.
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