Source, a specialist provider of exchange traded products for European investors, is launching thirteen Exchange Traded Funds (ETFs) and twenty two Exchange Traded Commodity (ETC) products today. Source is an open architecture platform created by Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley and the funds are domiciled in Dublin.
The launch represents the first product offering of Source, an open architecture platform created by Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley to enhance the performance and trading environment for exchange traded products in Europe. By creating common standards and augmented design features, Source’s products will offer investors improved liquidity, reduced credit risk, increased transparency and more efficient competition.
Source says despite recent market turbulence, demand for ETFs and similar products continues to grow, with net European inflows of over €47 billion in 2008. Investors clearly value the simplicity, transparency and low cost associated with these products. Source believes that the market has even greater potential, and that improved product design and an enhanced trading environment are critical for further growth.
One specific focus of Source is liquidity. In the United States daily on exchange trading volumes exceed $90 billion (17 per cent of ETF assets under management), while in Europe that figure is approximately $2 billion (less than 2 per cent of ETF assets under management). Source intends to close that gap by focusing all trading on a single stock exchange, Deutsche Börse, offering very efficient total return products and allowing multiple brokers to participate on an equal footing. These are significant improvements over existing products.
A second area of focus for Source is the tight control of credit risk. A combination of risk diversification, third party monitoring and self-imposed guidelines are employed to provide strong investor protection. Source’s commodity products, for example, are the only exchange traded products that are secured exclusively by G-7 government bonds and cash.
These and other initiatives mean that Source is confident that its unique approach to exchange traded products will deliver a superior investor experience and rapid growth in assets. Source is committed to expanding the partnership approach of its platform and is actively seeking additional participants.
Commenting on the launch of Source, Ted Hood, CEO said: “Source is very excited about the growth prospects of the European market for exchange traded products. We are convinced that we can bring about even greater growth by offering investors improved products and providing an enhanced trading environment. We will achieve this by creating common product standards focused on increased liquidity, reduced credit risk, greater transparency and more efficient competition.”
Interested investors can obtain more detailed information directly from Source, Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley. Market participants interested in joining the Source platform are invited to contact Source directly.
Source UK is regulated by the UK Financial Services Authority.
Bank of Ireland Securities Services (BoISS) in Ireland is the Administrator and Custodian to the funds, and Maples and Calder, Dublin as lawyers to the fund platform.
Liam Manahan Managing Director of Bank of Ireland Securities Services commented "Bank of Ireland is delighted to partner with Source in this venture. We have invested significant resources in developing this bespoke product model as we believe that it will be very successful and have a significant impact on the European ETF market."
Barry McGrath, Partner, Maples and Calder, Dublin added: "Having the best fund structure in place is imperative for success. Source has appointed Ireland's largest international law firm Maples and Calder to act as legal advisors to the platform because of their recognised experience and international and local expertise in the establishment of funds and fund related issues."