Several European ETF issuers will be able to launch ETFs on the S&P 500 index as of 17 May, when Standard and Poor’s exclusive arrangement with iShares ends.
For the past 10 years iShares has been the only ETF sponsor with the right to use the S&P 500 to underlie its ETFs, meaning the iShares S&P 500 fund listed on the London Stock Exchange has been the only ETF tracking this benchmark in Europe.
S&P global head of ETF licensing Reid Steadman says: "On 17 May, we are going to see more S&P 500 ETFs list and trade in Europe - that will be the key point at which our partnership with iShares with respect to the S&P 500 will be non-exclusive."
He says Europe in particular has a commercially expanding ETF landscape and more licences would be advantageous to everyone, including investors, ETF sponsors, as well as S&P's business.
Reid says: "In Europe our path was most clear, as we knew there was very strong demand for the S&P 500 and we knew there was a specific issue to address - the fragmentation of the market - so we have adopted our strategy to address that issue. We are thinking through our strategy for the other regions."
The exclusivity agreement was originally made when iShares first came to market and when ETFs as a concept had not yet taken hold.
Reid says: "We saw the level of commitment from iShares and we felt we wanted to be part of that - so we entered into a long term exclusive arrangement. Although exclusivity will soon be over, it's a strong relationship that will continue to grow."
The iShares S&P 500 currently has around £4.8bn in assets under management.
Reid adds: "Our hope is that over the next five years, we'll have multiples of this figure coming into ETFs on the S&P 500. This is one of the few global brands in the ETF space, so there's a lot of opportunity for this index in Europe."
