May 18, 2010

European ETF Sponsors Receive Licenses for S&P 500 Index Funds

New products will expand global access to U.S. equity markets

The universe of investors able to trade the S&P 500 index is set to increase significantly with the May 17 announcement by Standard & Poor's that it has licensed seven European ETF sponsors to create and list funds based on the benchmark on major European exchanges. The new S&P 500 ETFs will list throughout May, the statement said.

"Demand has also been very strong across Europe for our other core indices, as this year alone, 15 ETFs throughout Europe have been launched based upon Standard & Poor's family of global indices," Alex Matturri, executive managing director at S&P Indices, said in the statement. "Our strategy is clear: provide greater access to more markets for more investors throughout the world."

Lyxor is among the European providers that have signed licensing agreements, according to a May 13 report by Global Pensions (http://www.globalpensions.com/global-pensions/news/1636821/etf-providers-sign-s-p-500-licence-agreements).

The S&P 500 index, which includes leading companies in leading sectors of the U.S. economy, has more than $3.5 trillion benchmarked to it globally, with index assets making up some $1 trillion of that amount, the statement said.

The new licensing agreements are part of the index provider's effort to provide expanded access to the U.S. equity markets for global investors, S&P said. In March, the firm licensed the National Stock Exchange of India (NSE) to create and list Indian rupee-denominated futures contracts on the S&P 500. That licensing agreement, jointly from S&P and Chicago Mercantile Exchange, another S&P licensee, to NSE, is part of a cross-listing arrangement announced by CME and NSE on March 10, which provides for two exchanges to create and list new derivatives products based upon Indian and U.S. equity benchmark indices.

Michael S. Fischer (msf7@columbia.edu) is a New York-based financial writer and editor and a frequent contributor to Wealth Manager.

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