Borsa Italiana has commenced trading in 32 ETCs, the financial instruments which replicate the trend of commodities or of indices of commodities.
The new instruments will be listed on ETFplus market which from 2 April 2007 is the electronic regulated market of Borsa Italiana entirely dedicated to the trading in real time of ETFs, structured ETFs and ETCs.
ETFplus represents the natural evolution of the world of 'clones' and meets the needs of creating a single market where to trade, beyond ETFs, also innovative OICR (the so called structured ETFs) and the category of ETCs, financial instruments which, although are not funds, are similar to ETFs for their use and investment.
ETCs are shares without expiration issued by a company resulting from a direct investment of the issuer either in the commodities or in derivatives contracts on commodities. The price of ETCs is therefore linked directly or indirectly to the trend of the underlying, as the price of ETFs is linked to the value of the referring index.
Like the ETFs, the ETCs are traded on the stock exchange as shares and replicate in a passive way the performance of the commodity linked with, thus being appropriately part of the 'clones' family. Furthermore, as for the ETFs, the authorized intermediaries can underwrite or reimburse the shares on a daily basis at the price of the official market of reference of the underlying commodity. The minimum lot of trading is of one share.
Pietro Poletto, head of ETFplus market remarked: 'the commodities represent an important asset class for the portfolios of both institutional and retail investors. An investment in commodities allows to protect the own investments from the risk of inflation and to improve the risk-performance ratio of the portfolio, considering the low historical correlation with the shares and bonds market. The ETCs broaden the investment opportunities making possible for the saver to invest on single commodities as gold, oil, gas or sugar. This possibility is instead excluded by ETFs which, due to regulation, has to guarantee a certain degree of diversification. The ETFplus market, thanks to the real time quotation, will enable an easier access to the market of the commodities, in a simple and transparent way and with a high potential of liquidity'.