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Commodities come back to the City after 300 years
26/09/06
ETF Securities lists 29 Exchange Traded Commodities on the London Stock Exchange
First London Stock Exchange trading day 27 September
London - ETF Securities Ltd, the world pioneer of Exchange Traded Commodities (ETCs), will tomorrow list 29 separate ETCs, comprising of 19 individual securities and 10 index securities, on the London Stock Exchange (listed below).
The introduction of futures contracts on commodity trading around 1698 signalled the end of trades in cash commodities in the UK. This ground-breaking launch from ETF Securities puts London back on the map as a world centre for commodity trading, giving investors access to more individual commodities on a single exchange, tradable in the same time zone, than anywhere else in the world.
Until now, no single exchange has covered all the world's major commodities or commodity groups (energy, agriculture, livestock, precious metals, industrial metals).
Tomorrow's launch, coupled with the investment demand for Exchange Traded Funds specifically in commodities, has prompted the London Stock Exchange (LSE) to create a new sector, Exchange Traded Commodities. The new trading platform on the LSE will deal exclusively in ETCs, with the management of ETF Securities having created all 32 securities (29 new ones and 3 existing ones).
This is largest-ever simultaneous listing on the LSE and will enable ordinary investors, for the first time, to trade such an expansive range of commodities through ordinary brokerage accounts just like any equity. The new securities will also be the first listed products to track a series of sub-indices representing individual commodities, along with commodity groups, that have recently been added to the Dow Jones-AIG Commodity Index family.
Similar to Exchange Traded Funds, ETCs are liquid, accessible and simple. ETCs can be created and redeemed on a continuous basis by market makers, matching the liquidity of the underlying markets. ETCs are open-ended securities which can be bought and sold intraday by investors on a regulated exchange in the same way as any equity. They provide accurate and transparent commodity exposure to recognised benchmarks in a single trade. In addition, ETCs require no trading or management of futures contracts as ETCs are simply priced off new commodity indices published by Dow Jones Indexes.
Investors can buy and sell the new ETCs through regulated brokers or approved market makers. ETCs can be traded with all the same order types available to equities, including market, limit and stop orders. They can also be shorted through stock borrowing or CFDs. The minimum trade size is one security and settlement is T+3 (trade date plus three business days) in CREST.
Commenting on the launch of the ETCs, Graham Tuckwell, Chairman of ETF Securities, said:
"We designed ETCs to be simple and secure, open-ended securities. They have lowered many of the barriers that previously prevented some investors from investing in commodities including access, trading and operational risks, custody, and transaction costs. ETCs also provide a pure way of tracking a commodity rather than trying to replicate exposure by trading shares of commodity companies - many of which do not correlate to the underlying commodity, if available at all.
"ETCs do not involve any of the difficulties with buying and then managing a futures position - such as worrying about margin calls, contracts expiring and rolling positions - or in buying and storing physical commodities. The new securities track indices created by Dow Jones Indexes and AIG and each individual commodity index tracks a designated futures contract and is designed to reflect the returns from investing in commodities."
Commenting on the listings, Martin Graham, Director of Markets at the London Stock Exchange said:
"London was one of the first exchanges in the world to list the Gold and Oil Securities, and we are delighted to be pioneers in becoming the first Exchange to offer investors a way to access a broad range of commodities without the need to trade futures and options. It will be the first time in the City's modern history investors have had such straightforward access to these commodities through London's marketplaces, and the first time that all of these commodities have been available through the same market and the same time-zone."
"Our new commodities segment is a demonstration of our commitment to giving investors more efficient and transparent ways to create balanced investment portfolios. With 32 exchange traded commodities, an expanding ETFs segment giving access to global equity and bond indices, and REITS set to offer pure property exposure from 2007, the London Stock Exchange is increasingly becoming a multi-asset market."
Further commenting on the listing, Michael A. Petronella, President, Dow Jones Indexes/Ventures comments:
"With now approximately $30 billion in assets tracking the Dow Jones-AIG Commodity Index on a global basis we seek to offer investors even more flexibility to manage commodity index-based investment. The Dow Jones-AIG single commodity indexes are efficient tools for investors to use in measuring their exposure to individual commodity futures markets,"
This press release is not a prospectus but an advertisement and investors should not subscribe for ETCs issued by ETFS Commodity Securities Limited except on the basis of information in the prospectus. A prospectus for ETFS Commodity Securities Limited is available at ETF Securities' website ww.etfsecurities.com.
This advertisement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any transferable securities to be issued by ETFS Commodity Securities Limited or any other securities, nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of the prospectus and recipients of this advertisement who are considering a purchase of securities following distribution of the prospectus in connection therewith are reminded that any such purchase should be made solely on the basis of the information contained in such prospectus and any supplementary prospectus(es). This advertisement does not constitute any recommendation regarding the securities of ETFS Commodity Securities Limited.
The communication of this press release is not being made by, and this press release has not been approved by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly this press release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this press release or any other document issued in connection with the offer and sale of the ETCs is only being made to and directed at those persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons together being referred to as "relevant persons"). The communication of this press release (or any other document issued in connection with the offer and sale of the ETCs) must not be acted upon or relied upon by persons who are not relevant persons. Persons distributing this press release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the ETCs in, from or otherwise involving the United Kingdom.
This is not an offer of securities for sale in the United States. Commodity Securities have not been and will not be registered under the USSecurities Act or any other applicable law of the United States. Commodity Securities are being offered and sold only outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act. The Issuer has not been and does not intend to become registered as an investment company under the Investment Company Act and related rules. Commodity Securities and any beneficial interest therein may not be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If the Issuer determines that any Security Holder is a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act), the Issuer may redeem the Commodity Securities held by that Security Holder in accordance with the provisions described in the Prospectus. Commodity Securities may not be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Commodity Securities held by that Security Holder in accordance with the provisions described in the Prospectus."
"Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," and DJ-AIGCISM" are service marks of Dow Jones & Company, Inc. and American International Group, Inc. ("American International Group"), as the case may be, and will be licensed for use for certain purposes by ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related sub-indices (including single commodity sub-indices) are not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIG-FP, American International Group, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product(s).
New LSE website: www.londonstockexchange.com/etcs for more detailed information on the ETC market
To obtain a copy of the prospectus or to register for the ETF Securities' institutional presentation at Bloomberg's London office, please visit the website at www.etfsecurities.com
The 19 separate classes of commodity securities listed tomorrow are:
- ETFS Aluminium
- ETFS Coffee
- ETFS Copper
- ETFS Corn
- ETFS Cotton
- ETFS Crude Oil
- ETFS Gasoline
- ETFS Gold
- ETFS Heating Oil
- ETFS Lean Hogs
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- ETFS Live Cattle
- ETFS Natural Gas
- ETFS Nickel
- ETFS Silver
- ETFS Soybean Oil
- ETFS Soybeans
- ETFS Sugar
- ETFS Wheat
- ETFS Zinc
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The 10 baskets of commodities to be listed are:
- ETFS All Commodities DJ-AIGCISM
- ETFS Agriculture DJ-AIGCISM
- ETFS Energy DJ-AIGCISM
- ETFS Ex-Energy DJ-AIGCISM
- ETFS Grains DJ-AIGCISM
- ETFS Industrial Metals DJ-AIGCISM
- ETFS Livestock DJ-AIGCISM
- ETFS Petroleum DJ-AIGCISM
- ETFS Precious Metals DJ-AIGCISM
- ETFS Softs DJ-AIGCISM
For further information, please contact:
Graham Tuckwell (Chairman)
ETF Securities Limited
Tel: +44 (0) 20 7355 9810, +44 (0) 7910 112 756
Email : info@etfsecurities.com
Claire Burston/Ben Larter
Penrose Financial
Tel: +44 (0) 20 7786 4886/4876
Notes to editors:
ETF Securities Limited has been a pioneer in developing Exchange Traded Commodities (ETCs) - securities which track commodity prices and trade on a stock exchange. The management of ETF Securities launched the world's first ETC (Gold Bullion Securities in Australia) and has since launched both ETFS Oil Securities and Gold Bullion Securities on the London Stock Exchange (LSE). To date these securities have attracted almost US$2 billion in assets.
The Dow Jones - AIG Commodity IndexSM(DJ-AIGCISM) is designed to be a highly liquid and diversified benchmark for the commodity futures market. It is composed of futures contracts on 19 physical commodities traded on U.S. exchanges, with the exception of aluminium, nickel and zinc, which trade on the London Metal Exchange (LME). The DJ-AIGCI family of indexes includes both the DJ-AIGCI (which is calculated on an excess return basis) and a total return index based on the DJ-AIGCI (the DJ-AIGCITRSM). In addition, there are nine sub-indexes, representing the major commodity sectors within the index: Energy (including petroleum and natural gas), Petroleum (including crude oil, heating oil and unleaded gasoline), Precious Metals, Industrial Metals, Grains, Livestock, Softs, Agriculture and ExEnergy. The DJ-AIGCI family of indexes also consists of single commodity indexes on all of the components currently part of the DJ-AIGCI, plus cocoa.
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