ESMA’s proposed paper, expected in January, will offer specific rules for European regulators on ETF transparency. Although these will not be legally binding, it is expected that the guidelines will have to be adopted by national regulators.
Steven Maijoor, chairman of ESMA, said last week that the regulator would require providers of all ETFs engaging in securities lending to disclose whether they lend out the underlying securities and what collateral the providers receive in return. He said: “We aim at delivering more transparency vis-à-vis investors by requiring funds to disclose in their prospectuses the fact that they make use of securities lending, and setting out some specific rules on the disclosure of collateral and its quality”.
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