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Investor interest in ETFs has increased worldwide as evidenced by the sharp increase in funds invested in these types of products. Assets managed under ETF structures totalled almost $1.9 trillion at end January 2013, representing roughly 7 per cent of the global mutual fund market. This dynamic growth in ETFs has gradually attracted the attention of regulators, concerned about the potential impact of ETFs on investors and on the broader marketplace, as the industry has continued to evolve through diversification and the launch of new innovative products.
Already in the course of 2008-2009, IOSCO began to look more closely at the rise of ETFs, helping to launch an extensive debate, both within and outside the regulatory community (i.e. involving asset managers, investors and other multilateral institutions), on ways for regulators to address the specificities of these products, while also seeking to address their potential risks.
Numerous consultations among IOSCO’s member regulators and their repeated engagements with representatives of the global ETF industry have led to this report. As such, it reflects a shared consensus within the regulatory community as to how the regulation of ETFs should be approached. Taking into account the comments expressed during the consultation process, IOSCO has focused its final recommendations on features that are specific to ETFs. The principles address ETFs that are organised as Collective Investment Schemes (CIS) and do not apply to other, non-CIS, Exchange-Traded Products (ETPs).