11.18.2013
By Terry Flanagan

Lyxor Lists ETFs on Bats Chi-X

Lyxor Asset Management could list commodity or fixed income exchange-traded funds on Bats Chi-X after becoming the second issuer to join the exchange’s new listings business with two equity products.

Grégoire Blanc, head of capital markets at Lyxor, told Markets Media: “Bats Chi-X could be relevant for Lyxor for commodity or fixed income ETFs or any exposure that is interesting for investors across the whole European market.”

Today iShares, the ETF platform of BlackRock, became the inaugural issuer to cross-list on Bats Chi-X’s pan-European listings service. Lyxor will list two ETFs on 25 November according to a statement from the exchange last week.

“Lyxor is very well placed in Europe and Bats Chi-X is a truly pan-European exchange which complements our model of offering liquidity in ETFs to all European investors,” said Blanc. “We aim to ultimately reduce costs for ETF investors and we are working on a number of different initiatives.”

The asset manager, a subsidiary of French bank Societe Generale, was founded in 1998 and has more than $110bn of assets across alternative investments, ETFs & indexing, multi-asset investments and structured investments. In ETFs, Lyxor is third in Europe with more than $41bn of assets according to the firm.

On Bats Chi-X the fund manager is listing the the Lyxor Ucits ETF Euro Stoxx 50 (MSE), Lyxor’s largest by assets at €4.5bn, which will trade in Euros and Lyxor Ucits ETF MSCI Emerging Markets (LEMD) which will trade in US dollars.

“We have seen high demand for equity ETFs while fixed income demand is probably less than a year ago. Both emerging and developed market equities have been very busy but the demand for European equities has been notable in the last three or four months and that trend looks set to continue,”added Blanc.

In order to minimise trading costs, Bats Chi-X is the first European exchange to offer a competitive liquidity provider program to ETF market makers. In the CLP program, issuers have a budget to reward market makers who meet specific criteria such as the bid-offer spread, the number of shares and the length of time for which they offer prices. The exchange monitors their performance to allocate the rebates.

“Several liquidity providers and market makers have already agreed to support the Bats Chi-X listings so the initiative has been well received. We are waiting to see the overall response from investors but the ones we have spoken to are all very keen,” said Blanc.

When Bats Chi-X Europe announced the launch of listings in October chief executive Mark Hemsley told Markets Media that when they we spoke to clients about primary listings they cited ETFs as having the most friction in the marketplace and where they wanted radical change. European issuers currently need to list the same ETF on multiple venues, with clearing and settlement in multiple locations.

“In the long run we would like to consolidate listings as fragmentation affects liquidity and having trading on a single exchange would be a huge advantage for both issuers and investors,” added Blanc. “However there is also added value from local exchanges as that is the venue that  local investors know and where they feel most comfortable.

 

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