Complex European ETFs Face Scrutiny from Regulators | Page 2 of 2 | ETF Trends

Britain’s Financial Services Authority and the Bank of England’s Financial Policy Committee have already issued a warning in the lack of transparency in this segment of the market. The ESMA also recently held a meeting to outline possible transparency guidelines. [European Regulators Push for More ETF Transparency]

“The classical ETF was a product where if you followed an index you would buy, let’s say, the most important stocks of an index and they would be your ETF,” Maijoor said. “There is now financial engineering” in creating synthetic ETFs, and “we think it needs to be closely looked at whether those new products are solid, are safe, and don’t have any stability issue.”

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.