ETF Securities Lists Short and Long CNY Currency ETCs today as China signals move to a managed float for CNY

• ETF Securities Lists 22 new Currency ETCs on LSE including Europe’s first listing of emerging market Currency ETCs
• Four new emerging market Currency ETCs with long or short exposure to the Chinese Renminbi and Indian Rupee
• 18 new GBP-based Currency ETCs with long or short exposure to G10 currencies
• Exposure to world’s most liquid asset class through a total of 50 Currency ETCs

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 MSFX^SM 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. The launch has coincided with news that China intends to move to a managed float of its currency due to pressure from other nations to abandon its US peg which was perceived as being advantageous for Chinese industry. As a result, the CNY 3 month Non Deliverable Forward contract was down 0.5% on Monday morning, reflecting an expected appreciation of the CNY¹.

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.

Currency 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.

¹ Source: Bloomberg as of 9.10am, 21st June 2010

The 22 new securities listed on the London Stock Exchange are:

Emerging Market Currencies vs. USD


Currency ETCs are designed to replicate a fully collateralised long or short investment in either deliverable forward contracts (in the case of developed market currencies) or non deliverable forward contracts (in the case of emerging market currencies). All Currency ETCs are fully collateralised in order to mitigate counter-party risk and listed in the ETC segment of the LSE.

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. To date, Currency ETCs exposed to JPY, AUD, GBP and EUR have been the most popular. Since the launch of the Currency ETCs in November 2009, assets have grown to approximately $200 million 4th June 2010 and average monthly trading volumes have risen strongly, up over 970% since start of 20102.

Nik Bienkowski, Chief Operating Officer, commenting on the launch, said:

“Currencies have been around for many centuries, however until the turn of the 20th century, investors focused primarily on equities and bonds. With today’s financial crisis continuing and the poor performance of equities over the past ten years, we’ve seen that investors are looking for liquid and transparent markets and thus currencies are starting to appear on their radar screens. In addition, currencies are driven by the macro environment which has shown high volatility in the past few years, and because currencies are valued relative to other currencies, therefore if one goes up then the other must go down. Thus depending on whether an investor has gone long or short, an investor can potentially profit regardless of market direction”.

Martin Arnold, Senior Research Analyst, commenting on the launch, said:

“Strong growth in recent years has forced policymakers to tighten monetary policy to contain inflationary pressures in certain Asian emerging countries. The Chinese Renminbi has appreciated by approximately 18% versus USD over the past five years against a back drop of 8% to 12% p.a. GDP growth in China and one of the worst 2 Source: ETF Securities, Bloomberg (data as of 4th June 2010) financial crises ever in the United States. Over the same period, the Indian Rupee has slightly depreciated against USD despite India’s 6% to 10% p.a. GDP growth.

With the changed rhetoric from the Peoples Bank of China over the weekend that it will allow the Renminbi to appreciate against a basket of currencies and let the market play a fundamental role in determining the exchange rate, today’s launch of the Currency ETC tracking the Chinese Renminbi provides investors with a simple and secure way to take advantage of this policy change.

In the current environment the critical issue from a UK perspective is the parlous fiscal situation: while the newly formed Coalition British government is cognisant of the importance of reducing the deficit, the key is the implementation of effective policy. Investors appear to be growing confident that this can happen. However, against other G10 currencies like the Norwegian Krone, where fiscal problems are non-existent, the outlook for GBP looks somewhat more bleak. A similarly bleak outlook could be in store for GBP against the New Zealand Dollar, where rate hikes are increasingly expected. Being able to trade GBP against other G10 currencies through Currency ETCs now offer investors additional flexibility.”

Commenting, Pietro Poletto, Head of Fixed Income at London Stock Exchange Group, said:

"London has long been the global centre for foreign exchange trading, with an unparalleled pool of investors and expertise. The products launched on the London Stock Exchange today will enhance that status by offering a new way to access increasingly significant and sought after currencies from around the world. Currencies like the Indian Rupee and the Chinese Remnimbi, not previously tradable on a stock exchange, can now be traded in a new way in the world's foreign exchange capital.

The products launched today will further diversify the range of instruments hosted by London Stock Exchange Group which as well as hosting Europe's first suite of Currency ETCs, is Europe's leading ETP exchange, hosting more trades than any other operator, and listing over 700 products across London and Milan."

-ENDS

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) above 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 Emerging Market and G10 Currencies. ETPs are simple to access as they are traded in five currencies (EUR, USD, GBP, AUD and JPY) and listed across eight major exchanges globally including the London Stock Exchange Group (London Stock Exchange and Borsa Italiana), the New York Stock Exchange, the Tokyo Stock Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, and the Australian Securities Exchange.

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.

For further information, please contact: ETF Securities’ press office on:
Tel: +44 (0) 20 7448 4330
Email: press@etfsecurities.com

ETF Securities Conference Call:

About ETFS Currency ETCs:

The first 18 Currency ETCs were listed on the LSE on the 12th November 2009 and track MSFX Currency IndicesSM. Since inception, the Currency ETCs have rapidly generated interest with eight liquidity providers signing up and four Multilateral Trading Facilities (MTFs) to provide investors access to these new securities. Further 10 Euro-based Currency ETCs were listed on the Deutsche Boerse (Xetra) on the 10th March 2010, and four Emerging Market and 18 GBPbased Currency ETCs are planned to be launched on LSE in the coming weeks.

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 but traded on a regulated exchange in the same way as an equity. Historically, the average daily turnover of the global FX market is about $3.2 trillion which compares to the average daily turnover of $450 billion for global equities, $48 billion for the New York Stock Exchange and $6 billion for the London Stock Exchange. Thus currencies are considered much more liquid than equities.

ETF Securities launched the Currency ETC platform due to investor demand for secure, transparent and liquid exchange traded products. 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.

Currency ETCs are backed by the same eligible collateral criteria as ETF Securities’ existing Commodity ETCs. With ETF Securities’ Commodity ETC assets having grown by approximately 150% in 2009 to nearly $20 billion and volumes having quadrupled to around $2 billion per week, it is clear that investors have widely accepted the ETC structure as a secure vehicle of choice for exposure to commodities. As a result, the ETC product structure has been replicated to include currencies.

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

Disclaimer:

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