ETF Securities Lists 22 new Currency ETCs

Jun 21 2011

London, 21 June, 2010 - ETF Securities (ETFS), the global pioneer in Exchange Traded Commodities (Commodity ETCs) and 3rd generation Exchange Traded Funds (ETFs) has today listed 22 new currency ETCs on the London Stock Exchange (LSE). Four of the currency ETCs are emerging market and 18 are GBP-based Currency ETCs. The Currency ETCs are based on the MSFXSM Index Family, which are designed by Morgan Stanley as a tradable benchmark for foreign exchange rate performance.

For the first time in Europe, investors have now access to emerging market Currency ETCs which enable investors to go long or short the Chinese Renminbi (CNY) or the Indian Rupee (INR). Since launching its Currency ETC platform, ETF Securities has received significant interest for emerging market currencies such as the Chinese Renminbi and the Indian Rupee, which are traditionally difficult to access for non-domestic investors.  

With booming local economies, investment demand for emerging market equities, bonds and currencies continues to grow. Many emerging market currencies are not accessible to foreign investors due to restrictions or capital controls however foreign investors are able to access these markets through Non Deliverable Forward (NDF) contracts and now Currency ETCs.

Cu rrency ETCs and NDFs provide access to otherwise inaccessible markets. NDF markets are impacted by many factors including expectations of the relevant exchange rates and central bank policies. Therefore even though a currency such as the Chinese Renminbi is pegged to the US Dollar (USD), it is possible for emerging market Currency ETCs to change in price. For example, if there is a change in investor's expectations regarding the Chinese Renminbi such that CNY is expected to appreciate versus USD at some point in the near future, then the price of ETFS Long CNY Short USD would likely rise, and the value of ETFS Short CNY Long USD would likely fall.
In addition, 18 long and short developed market G-10 Currency ETCs versus GBP have been added to the platform, complementing the existing 28 long and short G-10 Currency ETCs versus USD and the Euro. The new Currency ETCs versus GBP will offer greater choice and flexibility for local investors, enabling them to take long or short exposures against the British Pound. With the British Pound being weighed down by debt and default concerns in the current environment, investors will be able to use new Currency ETCs such as ETFS Long USD Short GBP (GBUS) or ETFS Long CHF Short GBP (GBCH) to play the relative safety of the US Dollar or the Swiss Franc versus GBP.