Exchange Traded International Securities

Exchange Traded International Securities (ETIS) are ASX listed securities that give investors exposure to individual shares traded on other exchanges around the world. Currently ETIS provide exposure to a number of shares listed in the US on the New York and Nasdaq Stock Exchanges. ETIS are denominated in Australian Dollars, but the company’s US listed shares are denominated in US dollars.

Structure

Exchange Traded International Securities are issued by the Royal Bank of Scotland (RBS). RBS will provide the relevant price and market for the individual ETIS security so an investor can buy or sell the ETIS during ASX trading hours. The price that the ETIS trades for will be based on the price of the reference share and the current AUD/USD exchange rate.

Therefore an ETIS will rise in price, when:

  • The US listed security increases in price
  • The AUD/USD exchange rate declines

An ETIS will decrease in price when the opposite occurs.

Benefits

  • Low entry cost when compared to buying international shares directly via your international broker.
  • ETIS is denominated in AUD, so you don’t need USD to buy individual US stocks
  • ETIS is listed on the ASX, so you can trade during Australian market hours.
  • ETIS is held on CHESS, so your US company exposure is registered and visible in the same place as your Australian shares.
  • ETIS are traded via your existing share trading account, so there is no paper work to open a US trading account and no additional fees to pay for holding US shares.
  • You can diversify your portfolio by gaining exposure to some of the largest US companies.

Risks

  • Reference Share exposure – you are exposed to the performance and movements in price of the reference Share, being the individual listed US security.
  • Foreign Currency exposure – investors are exposed to movements in the foreign exchange rate between the US dollar denominated US Securities and the Australian dollar denominated ETIS.
  • Counterparty risk – the product is issued by RBS, and depends on RBS's ability to perform its obligations under the Terms set out in the PDS.
  • Liquidity - as with any security the fair value price to buy and sell securities may not be available at all times. RBS will provide buy and sell prices to ensure liquidity in each ETIS, which is overseen by the ASX. This ensures that the ETIS will not move materially from fair value of the US reference share.

ASX Code

  • All ETIS have a six letter code.
  • The first three letters are always ETS
  • The next three letters identify the underlying reference share

For example ETSGOO is the code fo the ETIS over Google shares.

More information

For more information on Exchange traded international securities click here.