Deutsche Börse Commodities Launches Xetra-Gold in UK and Netherlands
Investment in gold without front-end load or management fees/ Tradable at current gold price and 100 percent backed by gold
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“Our innovative securitization provides private and institutional investors with access to the gold market and gives them an efficient and cost-effective portfolio diversification opportunity,” said Martina Gruber, Managing Director of Deutsche Börse Commodities GmbH. “There is already demand for Xetra-Gold in the Netherlands – so far predominantly from private investors, as in Germany. We expect demand in the UK, in contrast, to come more from institutional investors,” she continued.
Xetra-Gold holders may assert their claim for delivery of physical gold. When buying or selling, investors benefit from the transparent pricing and favorable conditions of stock exchange securities trading. The price of one Xetra-Gold bearer note is always exactly the same as the price of one gram of gold on the world market in euros. The spread on Xetra between the bid and ask price of Xetra-Gold is generally around 0.1 percent – a maximum of 1 percent is permitted.
Xetra-Gold is always backed 100 percent by gold. Deutsche Börse Commodities’ gold reserve for Xetra-Gold is currently around 50 tons – valued at around €1.6 billion at current prices. Private investors can have the physical gold delivered to their bank and receive it there personally. More than 400 private investors have taken this option to date. Deutsche Börse Commodities also delivers the physical gold backing the bearer note to markets outside Germany where Xetra-Gold is admitted for trading and sales.
“The success of Xetra-Gold has exceeded our expectations in Germany, Luxembourg, Austria and Switzerland. Now we are launching Xetra-Gold in the UK and the Netherlands to give investors there a chance to profit from the competitive advantages of our product as well,” said Steffen Orben, Managing Director of Deutsche Börse Commodities GmbH. These include the stable and constant holdings: there is no front-end load for investments in this gold ETC and Deutsche Börse Commodities does not charge any ongoing management fees which would deplete the investor’s gold holdings. “If an investor buys 100 units of Xetra-Gold today, we will still be holding exactly 100 grams of gold in custody in 10 years’ time too,” continued Orben. Xetra-Gold is only subject to custody fees that are reported separately. They amount to 0.36 percent annually of the value under custody. It depends on the contract between the custodian bank and the buyer of Xetra-Gold to which amount the bank passes on these charges.
Since its launch in Germany in December 2007, Xetra-Gold has had by far the highest order book turnover in Deutsche Börse’s ETC segment (178 products). The order book volume on Xetra was around €1.2 billion in the first six months of 2010 – a market share of 37 percent in the commodities segment of the Xetra trading platform. The international derivatives exchange Eurex started offering futures and options on Xetra-Gold on 28 September due to the high level of market interest. Xetra-Gold has also been depositable as collateral with Eurex Clearing, Europe’s largest central counterparty, since 27 August.
Xetra-Gold conforms with European provisions for securities investment (UCITS directive), and can thus be suitable for institutional investors and investment funds too.
About Deutsche Börse Commodities GmbH
The issuer, Deutsche Börse Commodities GmbH, based in Frankfurt, is a joint venture of several large renowned companies. These are Deutsche Börse AG and the banking partners Commerzbank AG, Deutsche Bank AG, DZ Bank AG, B. Metzler seel. Sohn & Co. KGaA, and Swiss-based bank Vontobel. Umicore AG & Co. KG, a Group subsidiary of Umicore s.a. which operates several gold refineries across the globe and manufactures gold bars, is also a partner.The issuer’s sole business purpose is to provide the market with Xetra-Gold, the bearer note backed 100 percent with gold, and to provide for efficient, transparent and cost-effective trading of this securitization of physical gold. To this end, the partners bundle their expertise in stock exchange, financial markets, settlement and custody, and logistics. Deutsche Börse organizes trading, clearing (anonymously and securely via the central counterparty) and settlement of the transactions. The physical gold is supplied, monitored and processed by industry partner Umicore. Clearstream Banking Frankfurt, a subsidiary of Deutsche Börse, stores the gold in its vaults in line with the highest security standards.
Xetra® and Xetra-Gold® are registered trademarks of Deutsche Börse AG.