ETF Providers Face Three Major Compliance Issues: Report | Page 2 of 2 | ETF Trends

Regarding personnel on both ETF and mutual funds, compliance challenges occur when a sponsor tries to promote both ETF and traditional mutual fund simultaneously on a side-by-side basis. Specifically, ETFs cannot be marketed as “mutual funds.”

With the proliferation of new ETF strategies and styles, sponsors can not adhere to the same cookie cutter compliance issues for all ETFs as they have moved beyond the passive indexing structure. For instance, active ETFs will follow a different set of compliance. Additionally, ETFs that are associated with index providers or are based on in-house indices require so-called firewalls between the index side and the ETF side – changes to an index must be made public before being shared with ETF managers or others.

For more information on the ETF industry, visit our current affairs category.

Max Chen contributed to this article.