The London Stock Exchange plans to launch a new market segment for exchange-traded commodities (ETCs), which will enable investors to trade the asset class like shares, without any need to access the futures market.
The market segment will contain 32 exchange-traded commodities and commodity indices, including 29 which are due to be issued on Wednesday by ETF Securities Ltd.
“We are delighted to be pioneers in becoming the first exchange to offer investors a way to access a broad range of commodities without the need to trade futures and options,” Martin Graham, director of markets at the London Stock Exchange, said in a statement.
ETF Securities will launch 19 separate exchange-traded commodities (ETCs) on Wednesday, including aluminium, copper, nickel, zinc, silver and gold, and ten indices based on baskets of products, including all commodities, industrial metals and precious metals.
The ETCs are priced off new commodity indices published by Dow Jones Indexes.
The other ETCs will cover other individual commodities from the agricultural, energy, grains livestock and petroleum markets, including natural gas, crude oil, coffee and sugar.
“We designed ETCs to be simple and secure, open-ended securities. They have lowered many of the barriers that previously prevented some investors from investing in commodities including access, trading and operational risks, custody, and transaction costs,” said Graham Tuckwell, chairman of ETF Securities, in a statment.
“ETCs also provide a pure way of tracking a commodity rather than trying to replicate exposure by trading shares of commodity companies - many of which do not correlate to the underlying commodity, if available at all,” he added.
Alongside the new products are the London Stock Exchange`s existing gold and oil securities.