News

HANetf Introduces First (Physical Gold) ETC on GPW

PRESS RELEASE

• The first Exchange Traded Commodity (ETC) will be newly listed on the Warsaw Stock Exchange (GPW) on 30 August 2023
• The new product provides exposure to physical gold that has been responsibly sourced by, and is custodied with, The Royal Mint, in Britain
• The European ETF platform HANetf is the issuer of the first physical gold ETC on GPW

A new Exchange Traded Commodity (ETC) will be traded on GPW as of 30 August 2023. ETCs are mostly passive, physically backed instruments that resemble ETFs in operation but are created and offered as 100% physically backed debt instruments. The most popular underlying assets for ETCs are physical precious metals. The first ETC on GPW will be The Royal Mint Responsibly Sourced Physical Gold ETC (RMAU), issued by HANetf. This ETC provides exposure to physical gold that has been responsibly sourced by The Royal Mint, in Britain. It is the first financial product issued in partnership with The Royal Mint and the first gold ETC custodied with a European sovereign mint.

“As GPW, we aim to offer Polish investors the opportunity of building a passive investment portfolio providing broad geographic and thematic exposure using transparent exchange-traded investment products with low management fees. ETCs serve that function by complementing the offering with assets to which ETFs do not offer exposure due to regulatory restrictions. We are delighted to work with an issuer of the first ETC on GPW which is based on an asset that is very popular among Polish investors. Another great advantage of this instrument is that it is in line with the exchange’s ESG strategy: the gold is responsibly sourced from legal sources and a large part of it is verified recycled gold,” said Izabela Olszewska, Member of the Management Board of the Warsaw Stock Exchange.

What is new compared to the products offered on GPW that provide exposure to gold is that the gold is 100% physically backed with the option of redemption at the value of the ETC held by the issuer. Investors have the option of redeeming the ETC for physical gold bars or bullion coins (direct contact with the issuer is required), which is a feature unique to this instrument¹.

The gold is stored and guarded in The Royal Mint’s highly secure vault in Llantrisant, Wales and regularly audited by an independent party. These are London Bullion Market Association (LBMA) Good Delivery bars, that are sourced on a best endeavour basis from the LBMA’s Responsible Sourcing program to assure investors that the gold is from conflict-free, legal sources. Part of the gold custodied by the ETC will be 100% recycled gold. Recycled gold is less carbon intensive than mined gold. The ETC only holds gold bars, no cash or derivatives.

“We are very proud to bring the Royal Mint Responsibly Sourced Physical Gold ETC to the Polish market. We are also very proud to have worked closely with GPW to introduce the first ETC to be listed in Poland. The first ETC was listed in Europe in 2002 and ETCs now make up approximately 40% of all ETPs listed in Europe. RMAU blends the security of investing in LBMA good delivery bars custodied in one of the most highly secure purpose-built vaults, with management by one of the oldest companies in the world, set up in 889AD by Alfred the Great. End investors can also uniquely redeem for coins and bars. This ETC is also one of the most sustainable ways to hold physical gold as it is 100% backed by LBMA responsibly sourced bars of which a large portion are sourced from 100% verifiable recycled sources. The only such ETC available currently”, said Nik Bienkowski, Co-Founder & Co-CEO of HANetf.

RMAU has been created by HANetf in collaboration with The Royal Mint and launched in February 2020. The instrument is denominated in US dollars, the base currency of the ETC. One ETC corresponds to the value of 0.01 ounce of gold. The price of gold fluctuates on a daily basis and the value of gold is affected by various factors, including its hard availability, use in industrial processes, and use as an investment commodity. Precious metal prices can be affected by fundamental factors of supply and demand, the political and economic situation (particularly in precious metal producing countries) and natural disasters.

ETCs are debt securities traded on exchanges that are bought and sold at market prices, equivalent to the value of the asset custodied in the vault per instrument. ETCs may be listed in currencies other than the base currency and traded on one or more exchanges. As a result, the final ETC’s price depends on the exchange rate of the local currency against the USD.

It is common practice for the largest European exchanges to offer ETFs, ETCs and ETNs (Exchange Traded Notes) as a single product group, Exchange Traded Products, due to their similar function and operating principles. Despite the lack of EU harmonisation, a market practice has developed with a standard defining the basic features of ETCs that distinguish them from other exchange-traded instruments (in particular structured instruments):

• the instrument is passive – it tracks the performance of a commodity index
• issuer assets and investor assets are segregated, involving a custodian,
• the instrument is usually 100% physically backed (unlike, for example, structured instruments which are backed by the issuer’s assets)
• the instrument is open-ended – possibility of daily creation and redemption of certificates/units (similar to ETFs),
• participation of a market maker,
• the instruments are offered to investors and can be traded on the exchange like shares or ETFs.

For more information on the new product, visit https://www.hanetf.com/product/7/fund/the-royal-mint-responsibly-sourced-physical-gold-etc

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The Warsaw Stock Exchange Group (GPW Group) operates trading platforms for shares, Treasury and corporate bonds, derivatives, electricity and gas, and provides indices and benchmarks including WIBOR and WIBID. The index agent FTSE Russell classifies the Polish capital market as a Developed Market since 2018. The markets operated by the GPW Group are the biggest in Central and Eastern Europe. For more information, visit www.gpw.pl

¹ ETFs and other investment funds typically cannot directly invest in gold or other commodities, which means they cannot offer investors the physical gold redemption due to regulatory constraints.