Trading volumes in Europe’s first Currency ETC platform hit new high as GBP was the worst performing G-10 currency, down 5% in February

08/03/10

• ETFS Short GBP Long USD (SGBP) rose 5.1% in February as investors’ turn their focus on weak UK fundamentals



• Turnover on ETF Securities’ currency ETC platform surged 173% in February to a record high with ETFS Short EUR Long USD (SEUR) and ETFS Short GBP Long USD (SGBP) making up 60% of trading



• Long USD and short G10 Currency ETCs have seen the strongest interest, capturing 81% of total AUM



• Currencies have outperformed equities* over 3 years, with AUD outperforming by 46.5%



• Currency ETCs provide investors with an easy way to implement both long and short currency views in a convenient exchange traded product

London, 08/03/2010 – Turnover on ETF Securities’ Currency ETC platform surged 173% in February to a record high as investors use Europe’s first Currency ETCs to implement long and short tactical and strategic currency views. As the European sovereign debt crisis spread over the past two months, investors have focused on taking short positions in EUR and GBP vs. USD, with ETFS Short EUR Long USD (SEUR) and ETFS Short GBP Long USD (SGBP) making up 60% of trading volumes and 35% of AUM. As a result of credit concerns amongst various EU member countries and a worsening outlook for the UK economy, both the EUR and GBP have been the worst performing G-10 currencies versus USD in February and year to date.


Source: ETF Securities, as at 28 February 2010

Currency ETCs that are long USD and short G10 currencies have seen the most interest from investors, making up 81% of total assets. ETFS Short EUR Long USD (SEUR) has been the most popular trade in 2010, capturing 73% of new assets, while the Australian dollar held the most net long positions. Currency as an asset class has also performed well relative to equities* with the MSFX^SM Long Australian Dollar Index (TR) up 27.8% in the past three years, outperforming the S&P500 index by 46.5% over that period.

Currency ETCs provide long or short passive exposure to G10 currencies versus the US Dollar or the Euro, and also provide exposure to local interest rates in addition to FX movements. Currency ETCs are listed on the London Stock Exchange (LSE), and will be listed on the Deutsche Borse (Xetra) this week. Currency ETCs are intended for investors wishing to diversify their portfolio through the addition of a new asset class which has a low correlation with equities and bonds, or for those investors wanting to take advantage of tactical or strategic macro opportunities using the foreign exchange market.

Currency ETCs are backed by eligible collateral to the value of at least 100%** of the total value of all Currency ETCs outstanding and which is held in a segregated custody account by BNY Mellon. The collateral is adjusted daily to ensure credit risk is minimised. Currency ETCs are backed by the same eligible collateral criteria as ETF Securities’ existing Commodity ETCs. With Commodity ETC assets having nearly tripled in 2009 and volumes having doubled, it is clear that investors have widely accepted the ETC structure as a secure vehicle of choice for exposure to commodities. As a result, this is now been extended to include currencies.

Currency ETCs provide accurate and transparent currency exposure to recognised benchmarks in a single trade. In addition, Currency ETCs require no foreign currency account and no trading or management of futures/forward contracts as ETCs are simply priced off new currency indices published by Morgan Stanley.

Nicholas Brooks, Head of Research and Investment Strategy, said:

“There has been a significant change in currency market sentiment over the past few months with sovereign risk starting to play a much more important role in driving FX performance. Concerns about Greece’s sovereign debt and fiscal sustainability kicked off the crisis, but now it is spreading across other parts of Europe and across to the UK. With developed economy fiscal and debt positions likely to deteriorate into the foreseeable future, sovereign risk is likely to become a more permanent feature of the FX markets. Currency ETCs provide a convenient way to play these themes, providing both long and short exposures to a range of currencies. Some investors have been using ETCs to short “risk” currencies to hedge against a possible global risk asset correction, while others have been tactically shorting those currencies perceived more vulnerable. The bulk of trading and inflows on our currency ETC platform have been in Short EUR Long USD (SEUR) and ETFS Short GBP Long USD (SGBP) as GBP fell 5.1% and EUR fell 1.7% versus the USD in February.”

For further information, please contact:

Nicolas Rajner
Tel: +44 (0) 20 7448 4330
Email: nicolas.rajner@etfsecurities.com

Notes to Editors:

ETF Securities is a provider of Exchange Traded Commodities (ETCs) and 3rd generation Exchange Traded Funds (ETFs). The management of ETF Securities pioneered the development of ETCs, with the world's first listing of an ETC, Gold Bullion Securities in Australia and London in 2003 and then the world's first entire ETC platform which was listed on the London Stock Exchange in September 2006.

The Exchange Traded Products (ETPs) provide investors with a wide variety of investment strategies, with ETPs offering resource equities, physical, long, forward, leveraged and short exposure to all commodity sectors and now G10 Currencies.

ETPs are simple to access as they are traded in five currencies (EUR, USD, GBP, AUD and JPY) and listed on nine major exchanges globally including the London Stock Exchange, the New York Stock Exchange, the Tokyo Stock Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, Borsa Italiana, the Australian Securities Exchange and the Irish Stock Exchange.

Similar to Exchange Traded Funds (ETFs), ETCs are liquid, accessible and simple. ETCs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying foreign exchange markets and can be traded by investors on a regulated exchange in the same way as any equity.

* Equities as proxied by the S&P 500 (TR) performance over the last 3 years

** Currency ETCs are fully collateralised. The total value of Currency ETCs outstanding is backed by between 100% and 110% of Eligible Collateral held in a segregated Custody Account with BNY Mellon. The value of the Currency ETCs and Eligible Collateral are marked to market daily so that at the end of the previous trading day, all Currency ETCs are fully backed to minimise counterparty risks.

ETF Securities Conference Call:

Using Currencies as an Asset Class in a Dollar-Bullish World

Date: Tuesday 9th March 2010
Time: 11:00am and 15:00pm London Time

Special Guest Speakers: Sophia Drossos and Ronald Leven, Morgan Stanley

This call will discuss:

• How divergent monetary policy and other factors are giving the dollar an upward bias
• What a strengthening dollar and widening yield spreads imply for foreign exchange as an asset class
• Summary and Conclusions
• Question and Answer Session

To register your place today: www.etfsecurities.com/en/events/etfs_events_calls.asp

To learn more about ETF Securities go to: www.etfsecurities.com

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