Euroclear Bank has collaborated with GF International Asset Management, the UK subsidiary of the Chinese asset manager of GF Fund Management, to launch an international exchange traded fund (ETF), the GF International-FTSE China A UCITS ETF.
The ETF is the first fund product to be launched by a Europe-based Chinese asset manager, giving investors access to large and mid-cap equities on the Shanghai and Shenzhen stock exchanges in China via the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme.
"The Chinese asset manager will be able to distribute their product in Europe themselves, through their presence in Europe, without having to rely on a European third-party provider," said a spokesperson for Euroclear. "It will allow European investors to invest in Chinese equities from their home market."
The fund will mainly target institutional and retail investors, according to Euroclear.
The ETF, which uses Euroclear’s international issuance structure, is domiciled within the Luxembourg jurisdiction. It is listed and traded in USD on the London Stock Exchange, and settled directly in Euroclear’s ICSD service.
The ICSD will also allow GF International the flexibility to clear and settle in renminbi, for any possible renminbi ETF listing in future.
The ETF tracks the FTSE China A index, a well-diversified market capitalisation-weighted index offered by FTSE Russell.
“We selected Euroclear’s ICSD service for our first ETF in Europe for its renminbi settlement and clearing capabilities and to maximise post-trade efficiency,” said Miller Guo, CEO of GF International Asset Management.
“GF International is responsible for both the ETC’s investment management and distribution, where other Chinese ETFs listed in Europe are distributed via third parties or joint-venture products.”
Tim Howell stepped down as chief executive of Euroclear after six years at the post-trade giant, Global Investor reported in October 2016. In a statement at the time, the company revealed that in addition to implementing the Central Securities Depositaries Regulation (CSDR), Euroclear’s priorities include the expansion of fund services in emerging markets and improving the issuance and settlement of ETFs.