The London Stock Exchange (LSE) has launched the world's first multi-currency trading service for ETFs.
The new service gives investors the choice of buying ETFs in US dollars where that is the underlying currency of the index. This will give dollar-based investors a tax-efficient alternative to buying ETFs in the US markets, without the currency risk associated with a sterling priced ETF. The new service will enable ETFs to be traded simultaneously in both dollars and the current sterling or euro denomination.
Martin Graham, Director of Markets at the London Stock Exchange, said: "Managers of US dollar denominated funds who want to avoid currency risk and foreign exchange costs until now had little option but to buy ETFs in the American markets, which can be tax inefficient for overseas investors. Our new multicurrency trading platform means these investors now have the choice of buying ETFs in dollars on the London Stock Exchange during European trading hours."
The 12 ETFs in the scheme include the iShares MSCI North America and the iShares DJ Asia Pacific Select Dividend, launched on the London Stock Exchange on 5 June. The London Stock Exchange is currently the only exchange outside the US to have admitted these ETFs to trading, making trading on the London Stock Exchange tax-efficient for international investors seeking exposure to these indices using ETFs.
Chris Sutton, CEO iShares Europe, said: 'We are delighted that the London Stock Exchange have been working on new technology to enable this to happen. The systems have been tried and tested, so now iShares will be the first ETF provider to market making this technology available to investors who have their assets in US dollars. They will be able to purchase funds on the LSE in their currency thus removing the currency exchange requirement and simplifying the process. This move makes a lot of sense as London is a market which sees significant demand from investors outside of Europe."