Article Summary
- IOSCO encourages regulators, responsible entities, and trading venues to review and adopt good practices for ETFs
- The Board published Good Practices Relating to the Implementation of the IOSCO Principles for Exchange Traded Funds covering effective product structuring, disclosure, liquidity provision, and volatility control mechanisms.
- Following an extensive review of ETF markets, IOSCO has determined that the existing IOSCO Principles for the Regulation of Exchange Traded Funds (ETF Principles) remain relevant and appropriate.
The Board of the International Organization of Securities Commissions (IOSCO) has urged regulators and responsible entities to review and adopt good practices of ETFs.
This was contained in a statement obtained from the Commission’s website by Nairametrics.
Publication
IOSCO disclosed that it published Good Practices Relating to the Implementation of the IOSCO Principles for Exchange Traded Funds, covering effective product structuring, disclosure, liquidity provision, and volatility control mechanisms.
The Commission noted that following an extensive review of ETF markets, IOSCO has determined that the existing IOSCO Principles for the Regulation of Exchange Traded Funds (ETF Principles), remain relevant and appropriate.
It added that since the publication of the ETF Principles in 2013, ETF markets globally have continued to evolve and exhibit sustained growth in assets under management.
ETF industry developments include new products with exposure to less liquid and more novel asset classes and more complex investment strategies.
The IOSCO Board said it has concluded that ETF Principles would benefit from being supported, and further operationalized, by a set of Good Practices.
Jean-Paul Servais, Chair of the IOSCO Board, said with the publication of these Good Practices, IOSCO ensures that its policy framework for ETFs remains up-to-date, particularly considering significant market developments since the publication of IOSCO’s ETF Principles.
- “This report provides a rich discussion of major themes and recent developments in ETF markets as a backdrop to a set of Good Practices centered on the trading of ETF shares in the secondary market and the associated arbitrage mechanism,” he said.
Jurisdictions
Secretary General of IOSCO, Martin Moloney, stated that recognizing differences and variances among jurisdictions in the way that ETFs operate, are regulated, and the markets in which they trade, IOSCO is providing a set of Good Practices, as examples of how a jurisdiction could implement the ETF 2 Principles and other relevant IOSCO standards and guidance.
- “IOSCO encourages regulators, responsible entities, and trading venues to review and adopt these Good Practices, where appropriate, within each jurisdiction’s regulatory framework,” he said.
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