The Australian Securities and Investments Commission (ASIC) has released a report on exchange traded funds, outlining how the growing industry is regulated in Australia and the impact if proposed international principles to address concerns by overseas regulators. 

 

“Identifying the regulatory risks arising from potentially complex financial products, such as ETFs, is part of ASIC’s role to promote confident and informed investors and fair and efficient financial markets. ASIC has a range of regulatory powers relating to ETFs that help to promote these objectives,” ASIC Commissioner Greg Tranzer said.

 

The ETF industry attracts significant funds. As at 2012, approximately $4.3 billion, based on ASX data, is invested in ETFs in Australia, with a high level of retail participation (50-75% across most types of ETFs). The ETF industry continues to expand at a rapid rate in Australia, with new types of ETFs and new issuers continuing to emerge.

 

“The regulation of ETFs in Australia is in line with proposed international standards and reflects consideration of the issues identified in IOSCO’s consultation. Our view is supported by surveillance of current ETF issuers in Australia and discussions with industry participants,” Mr Tanzer said.

‘”In developing this report and considering how to use our powers, we have been involved in ongoing consultation with the ETF industry and will continue to liaise with the industry in the future, including with the ASX in relation to their rules on ETFs.

‘”In addition we conducted surveillance visits on the current ETF issuers, and will continue to watch this area closely to help reduce some of the complex regulatory risks that continue to emerge.”

 

The report can be found here