Euronext says it is the first exchange to use a simpler process for trading exchange-traded funds (ETFs).
The NAV Trading Facility collates orders sent to the exchange and executes them once a day at a price based on net asset value (Nav).
The other method of execution is on-book trading, or intra-day trading, which offers continuous liquidity but involves managing intra-day trading risk.
ABN Amro Basic Funds is the first firm to use the platform for two ETF products.
Euronext says the NAV Trading Facility will open up the ETF market to a broader investor base because the simpler method of investing creates the conditions for a number of savings plans across Europe to include ETFs in their product selection.
Pedro Fernandes, head of European exchange-traded products for Euronext, says: “We are very proud to be the first exchange to deliver a solution for ETF trading at Nav. The NAV Trading Facility complements intra-day/on-book trading and facilitates further usage of ETFs by investors, thereby supporting the overall development of ETFs in Europe.”
Euronext says the NAV Trading Facility is available in addition to on-book trading for all Euronext-listed open-ended funds, including ETFs. It was designed in close consultation with the Euronext College of Regulators and industry players. Also, it is aligned with recent regulatory guidelines for ETFs.
In July 2012, the European Securities and Markets Authority issued guidelines for Ucits funds that invest in indices, including ETFs, which centred on transparency.
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