UK Regulator Declares ETF Concerns

By
April 02, 2012
Share:

 

The Financial Service Authority, addressing potential problems with surrounding exchange-traded funds, expressed among other factors concerns about what these days is actually called an ETF, according to an article on the Financial Times.

Indeed, a majority of ETF issues stem from many products being labeled as an ETF, when many are actually securities that don’t offer the investor protections required by UCITS, Europe’s regulatory framework governing ETFs, FT said, citing a conference held last week in London by the FSA.

Stock-lending also looms as an example of conflicting interests in the ETF market, according to FT, which cited the FSA’s asset management sector team manager, Tony Hanlon. The ETF manager and lending agent may benefit from associate fees, all the while leaving investors in a fund exposed to all the downside risks, said the article.

Also mentioned was the concern about settlement delays building up on ETF trades—especially during times of high market stress, according to FT.

For the full story, go to FT.com.

ETF.COM CHANNELS

Interested in China? Use our China ETFs Channel, library, and ETF screener.

Interested in oil? Use our oil ETFs channel, library and ETF screener!

ETF DAILY DATA

The real estate ETF topped the inflows list on Tuesday, May 3.

On Tuesday, May 3, SSgA saw the largest net outflows of all ETF issuers.

ETF.COM ANALYST BLOGS

By Dave Nadig

How NAV works differently between ETFs and mutual funds.

By Drew Voros

With the broad equity ideas all taken, issuers look for thinner slices of exposure.

By David Lichtblau

How funds wash away capital gains through create/redeem process.

By Dave Nadig

End investors are the big winners; brokers—not so much.

ETF INDUSTRY PERSPECTIVE

By Adam Patti

ETFs are more tax efficient than mutual funds.

By Sprott Asset Management

New fund’s underlying index targets equities sentiment on social media.

By Kristi Kuechler

Avoid taking unrewarded—or unintended—risks.