Securitized derivative financial instruments on ETFplus

The ETCs and ETNs, listed on ETFplus market, are the financial instruments whose value is linked to the performance of its underlying (typically an index) and that are issued by companies whose exclusive corporate purpose is to make one or more issues of financial instruments. The issuer is typically a Special Purpose Vehicle (S.P.V.) which issues securities in relation to an investment in the underlying to which they refer or an investment in underlying derivative contracts.

Similarly to ETFs, these financial instruments listed on ETFplus market:

  • are traded on the Stock Exchange like the shares;
  • passively track the performance of the underlying to which they refer thus being fully entitled to being included in the family of “passive instruments”.

In particular, these financial instruments listed on ETFplus market have a structure which ensures that the assets acquired with the proceeds deriving from the subscription of an issue must constitute, to all intents and purposes, an independent pool of assets separated from that of the issuer. The incomes earned on such assets must be assigned exclusively to satisfy the rights incorporated in the financial instruments and possibly to meet the costs of the transaction. Moreover actions may not be brought against assets acquired with the proceeds deriving from the subscription of an issue by creditors other than the holders of the financial instruments in question.

These financial instruments traded on ETFplus market are characterized, on primary market, by creation and redemption in kind like ETFs. On secondary market, this mechanism allows the price to remain aligned with the underlying value because if there were any difference they would create arbitrage opportunities exploited by traders.

The financial instruments listed on ETFplus market whose target is to track an underlying, are divided, according the underlying category, into:

Exchange Traded Commodities: Financial instruments that track passively the performance of commodities or commodities indices.

Exchange Traded Notes: Financial instruments that track passively the performance of underlying or indices other than commodities (for example currency, equity or bond indices).

 


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