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iShares, the Exchange Traded Funds (ETF) platform of BlackRock, Inc. (NYSE: BLK) has Monday launched its first physically backed Exchange Traded Commodities (ETCs) in the UK, offering liquid exposure to four popular prec..
11 Apr 2011
LONDON (Commodity Online) : iShares, the Exchange Traded Funds (ETF) platform of BlackRock, Inc. (NYSE: BLK) has Monday launched its first physically backed Exchange Traded Commodities (ETCs) in the UK, offering liquid exposure to four popular precious metals.

The iShares Physical Gold ETC, iShares Physical Silver ETC, iShares Physical Platinum ETC and iShares Physical Palladium ETC listed on the London Stock Exchange Monday morning. They aim to track the day-to-day price of the underlying physical metals, as published by the London Bullion Market Association for gold and silver, and by the London Platinum and Palladium Market for platinum and palladium.

“The four physical ETCs will trade on exchange and are designed to meet iShares’ core values of transparency, liquidity and trading flexibility. They will provide exposure to the performance of physical commodities, but differ from existing iShares ETFs in several respects. iShares ETCs are debt securities linked to precious metals, with those metals held in segregated accounts in secure vaults.”, according to a press release.

Joe Linhares, Head of iShares EMEA commented: “The launch marks a natural extension of our product set, providing investors with the building blocks to help implement their investment views. Commodity related exchange traded products are generating significant interest from investors and as a fiduciary manager we take the responsibility of our investors’ interests very seriously. iShares physically backed ETC range has been designed to provide exposure to precious metals in a way that meets our core values of transparency, liquidity, trading flexibility and investor protection. ”

The iShares ETCs’ prospectus is regulated under the EU Prospectus Directive.

Other key features include:

• Over-allocation of metal: The debt securities are backed by metal bars vaulted in secure allocated accounts, so that credit risk to the custodian is minimised, in the unlikely event of a default by the custodian. Unique to iShares, the custodian will allocate up to one additional physical bar in order to ensure that all securities are always 100% backed by allocated metal.

• Transparency: The serial number for every metal bar which is held to back the debt linked securities is updated daily and published on the iShares website alongside other security details, offering investors a high degree of transparency.

• Insurance and custody arrangements: iShares’ custodian is JP Morgan Chase Bank N.A. The precious metal is covered by the custodian’s insurance, providing investors with added protection.

Axel Lomholt, Head of Product Development for iShares EMEA commented: “Precious metals can fulfil a number of functions in a portfolio, and are often considered a hedge against inflation as well as a diversification tool. iShares’ physically backed ETCs give investors precise exposure in a form that offers trading flexibility, cost efficiency and is often more convenient for an investor than holding coins or bars themselves. Our multi-dealer model helps manage liquidity and investors can rest assured that all metal is held in secure allocated accounts.”
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