To be called Source, the joint venture will start in Q1 2009, and involve the launch of a number of synthetic (swap-based) ETFs. One ETF market participant told IndexUniverse.com that the venture had been due to start in August this year, but had been delayed by the market turmoil of recent months. Morgan Stanley, however, denied the claim.

Both Goldman Sachs and Morgan Stanley have been forced this year to convert from investment bank to commercial bank status, and reduce leverage. The new venture can also be seen as a response to a fall in investor demand for uncollateralized bank products, such as certificates, swaps and notes, such as ETNs. Both banks had been involved in the ETN market, which has seen a drying-up of buyer interest since the collapse of Lehman Brothers in September.

IndexUniverse.com has requested confirmation and further details of the planned launch from both Morgan Stanley and Goldman Sachs, but so far neither bank has been prepared to comment on the details of the launch. No information is yet available on the underlying asset classes to be tracked, fees, the index providers or the primary listing exchange, although one industry participant suggested that the initial ETF launches would track established equity market benchmarks.

The entry of these two banks into the European ETF market, if confirmed, will be seen as another vote of confidence in the ETF market's prospects. Deborah Fuhr of Barclays Global Investors forecasts that global ETF assets under management will grow to US$2 trillion in 2011, from around $650 billion at end-October.