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Euronext To Launch Exchange Traded Funds

Ulrika Lomas, Tax-news.com, Brussels

11 January 2001

On January 15th, Euronext, the pan-European exchange melded from the Paris, Brussels and Amsterdam exchanges, is to launch Exchange Traded Funds (ETFs) which will track the Dow Jones Euro Stoxx 50 and Dow Jones Stoxx 50 indexes. Later, Euronext will add ETFs covering the Paris CAC40 Index and the AEX Index.

Under the name NextTrack, the new products will be traded through a central orderbook, like other Euronext products. Liquidity is guaranteed by at least two market makers per fund. The net asset value of the funds is calculated daily and disseminated by Euronext.

Initially, the ETFs will be traded on both the TSA system operated by Euronext Amsterdam and NSC at Euronext Paris, moving in the second half of the year to the new single platform to be shared by the Amsterdam, Brussels and Paris markets.

ETFs, are single, market-traded stocks designed to replicate the performance of an index or a sectoral basket of stocks. They work as funds by buying the underlying stocks in appropriate volumes, so that investors can buy a single security to share in the the results of a whole business sector, national economy or region. ETFs have become popular not just with individual investors but also with investment funds, for whom they can be very labour-saving.

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