London-based ETF Securities has announced the participation of BofA Merrill Lynch, Citi and Rabobank International in its “third generation” ETF trading platform, ETF Exchange (ETFX). The platform uses a “consortium model” whereby the banks will act as distribution partners, authorised participants and swap providers in an effort to increase liquidity and reduce counterparty risk. (See a recent IndexUniverse.eu interview with ETF Exchange CEO Mark Weeks for more details on the platform model.)

ETF Exchange currently offers 21 ETFs listed across 5 European exchanges (the London Stock Exchange, Deutsche Borse, NYSE-Euronext Amsterdam, the Borsa Italiana and the Irish Stock Exchange) and traded in up to 3 currencies (US dollar, euro and sterling). These include equity-resource, double leveraged and double short ETFs, with a total of US$320 million under management.

In a press release on today’s announcement, Weeks said: “This is an important milestone in the development of ETF Exchange. Working with banks of this calibre will provide investors with an unparalleled quality of service, across an innovative range of products. We believe the evolution of ETFX will make redundant the current single bank issuance models.”