Industry Updates

DWS becomes latest ETF issuer to complete transition to ICSD model

Original proposal to move to the ICSD model came in February

Tom Eckett

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DWS has transitioned its Irish-domiciled ETF range to the international central securities and depository (ICSD) model ahead of the UK's exit from the European Union.

Completing earlier this month, the project, which comprised of 50 staff and 20 external vendors and partners, saw the transition from issuing in the UK’s local CREST settlement system to the ICSD model.

The original proposal to move to the model came in February.

The shift comes after Euroclear UK & Ireland (EUI) will no longer be able to provide central securities depositary (CSD) services for Irish-domiciled ETFs after the UK leaves the EU in March 2021.

According to BNY Mellon, some €61bn of Irish ETP migrations are set to complete by the end of this year leading to 96% of Irish ETPs using some form of the ICSD model.

Fiona Bassett, global head of systematic investment solutions, commented: “The ability to feed multi-exchange transactions to the same ICSD will ultimately drive growth in the ETP market and related securities lending.”

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The move is part of a broader industry shift towards a single settlement structure for multiple exchanges.

Many ETF issuers have now switched to the ICSD model, which was introduced in 2013 to enable cross-listed ETFs to be settled in one pan-European location.

Previously, each exchange was linked to a regional CSD which led to fragmentation issues for cross-listed ETFs.

Earlier this month, UBS Asset Management converted its Irish-domiciled ETF range to Clearstream’s ICSDplus model in preparation for the Brexit deadline.

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