The industry welcomes the fact that IOSCO’s 2013 Principles remain relevant and appropriate and that no important gaps in the Principles have been identified. In the consultation report, we are pleased to see the resilience of the ETF structure being recognised, despite the severity of the March 2020 market correction and of more recent episodes, concluding that no ETF-specific structural issues have been identified as a cause for regulatory concern.
We are also supportive of the effort that has gone into considering the broader ETF ecosystem, as one constituted by a host of critical sell-side institutions (notably APs, MMs and LPs), as well as exchanges. We greet the proposed Good Practices in that they finally acknowledge the validity of different supervisory approaches to the regulation of ETFs, avoiding a too prescriptive “one-size-fit-all” approach. We believe that the Good Practices, once finalised, will constitute a compendium of sensible principles poised to assist the future growth of the ETF industry to the benefit of markets and end-investors alike. Moreover, far from being prescriptive, their application should be adapted to the specificities of different markets and situations.
In our response to IOSCO, we consider some of the core themes raised in the consultation report: effective product structuring; ETF basket and portfolio information; iNAV; competition in the ETF AP/MM market; investor disclosures around fees and costs.