Global Regulators & ETF Rulings

The exchange traded fund universe is comprised of various asset categories and investment strategies. In an attempt to help investors differentiate between the growing range of products available, global regulators are working on a standardized framework for ETF rules.

The International Organisation of Securities Commissions (IOSCO) is seeking greater disclosure into specific risks associated with each type of ETF, along with improved transparency into fees and expenses, Reuters reports.

The proposals reflect “a shared consensus within the regulatory community as to how the regulation of ETFs should be approached,” IOSCO said in a report.

Regulators want to help investors distinguish between index-based ETFs and other “synthetic” ETFs – leveraged/inverse funds that rely on derivatives, or Undertakings for Collective Investments in Transferable Securities (UCITS) in Europe, , reports Joe Morris for Ignites. [Understanding Synthetic ETFs, UCITs and Counterparty Risks]

IOSCO wants  to impose new rules to force ETF managers to be more transparent about counterparty risks raised by their securities lending activities.