Clearing Corp. Moves To Improve ETF Trading Efficiency

The Depository Trust & Clearing Corporation (DTCC), the central clearing agency for the U.S. funds industry, began accepting cash-only creations and redemptions for ETFs.

Previously, creations and redemptions for ETFs using commodities, foreign equities, credit default swaps and exchange-traded notes were not eligible for processing at DTCC subsidiary National Securities Clearing Corporation (NSCC), which serves as a central counterparty guarantee for investors.

NSCC also trimmed the settlement cycle for ETF participants, offering an optional shortened settlement cycle of one day (trade day + 1) instead of three (trade day + 3) for ETF transactions. That change better mirrors markets where underlying securities of ETFs already have a shorter settlement cycle, such as the commodities market, as well as some fixed-income categories.

LSE Group Reports 89% Trading Increase In 2008

ETF and ETC trading figures for 2008 at the London Stock Exchange and Borsa Italiana showed a strong increase. The value traded on the London Stock Exchange reached £65.8 billion (€82.2 billion), up 89 percent over the 2007 total. The total number of ETF and ETC trades was 1.8 million, a 20 percent year-over-year increase. By contrast, the total value of all trades at the LSE group (including all instruments and asset classes) fell by 11 percent, when compared with 2007.

During December 2008, the value traded in ETFs and ETCs was up 110 percent on the previous December, reaching £6.1 billion (€6.4 billion), while the number of trades grew 47 percent to 150,273.