Industry Updates

UBS AM converts ETFs to Clearstream’s ICSDplus model

Tom Eckett

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

Clearstream’s ICSDplus issuance model follows on from the international central securities depositary (ICSD) model which was introduced in 2013 to allow ETF issuers to offer ETFs across multiple exchanges but settle in one place.

Clearstream said its ICSDplus model, which USB AM will issue under, “facilitates efficient issuance, trading and post-trade activity”.

“Centralisation of securities within the ICSD market reduces costs and post-trade fragmentation,” the firm added.

The pan-European ICSD model enables issuers to settle in a more timely manner and reduce settlement failures meaning improved liquidity, transparency and trading volumes.

After the UK leaves the European Union, Euroclear UK & Ireland, Ireland’s issuing and settlement services provider, may be unable to provide issuer central securities depository (CSD) services for Irish securities.

Therefore, Euroclear has made the decision to move its issuance of Irish ETFs and Irish corporate securities to Euroclear Bank in Belgium.

According to BNY Mellon, approximately €61bn of further Irish ETP migrations are anticipated by the end of 2020 when 96% of Irish ETPs will use some form of the ICSD model.

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