Joseph Linhares, head of iShares in Europe, said: “ETFs started out as transparent, liquid, simple, vehicles but some have gone to opacity. We need to get back to full transparency across all the range of ETF products.”
BlackRock is backing proposals by regulators to impose new curbs on a market that has grown from one fund launched in 1989 to mirror the S&P 500 index to nearly 4,000 exchange traded products managing $1,626 billion in assets across the world. It is urging the industry to embrace higher hurdles on reporting, and argues that all trades, including over-the-counter deals which are carried out outside exchanges and which make up about two-thirds of ETF transactions in Europe, should be printed and made public, ideally on a daily basis.
BlackRock’s proposals come amid concerns raised by the IMF and global regulators, including the Financial Stability Board, about the systemic risk posed by ETFs, particularly derivative-backed funds. The European Securities and Markets Authority is consulting on proposals to impose new standards on the quality and amount of collateral that funds take from banks to back derivative transactions.
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