Global regulators agree outline for exchange-traded funds rules

City A.M. Reporter
GLOBAL securities regulators published a framework for further regulation of the $1.9 trillion Exchange Traded Funds (ETFs) market yesterday, seeking to make ETFs more consumer friendly as their index-based investment strategies grow in popularity.

The Madrid-based umbrella group International Organisation of Securities Commissions (Iosco) wants national regulators to encourage more disclosure to help investors differentiate between the growing range of exchange-traded products and the specific risks of each ETF type.

Among its top recommendations for regulation, Iosco has asked watchdogs to consider imposing rules to force ETF managers to be more transparent about the counterparty risks raised by their securities lending activities.

Iosco has also encouraged improved disclosure of fees and expenses for investing in ETFs to complement enhanced transparency on securities lending.