Following on from their recent consultation paper on good practices for consideration, the International Organisation of Securities Commissions ("IOSCO") published its report on Good Practices Relating to the Implementation of the IOSCO Principles for Exchange Traded Funds (the "Report") in May 2023.
The Report builds on the Principles for the Regulation of Exchange Traded Funds published in 2013 (the "ETF Principles").
The Report notes that the global ETF market has evolved and grown since the publication of the ETF Principles. However, in good news, IOSCO has concluded that "the ETF Principles remain relevant and appropriate. No major gaps have been identified, and no major regulatory issues were reported by IOSCO members or industry participants".
IOSCO further notes that the ETF structure has generally remained resilient during historical stress events, and that as at the date of the Report, no structural issues related to ETFs have been identified that have had a bearing on financial stability.
IOSCO propose 11 "good practices" (the "Good Practices") that regulators, responsible entities and / or trading venues are encouraged to consider and adopt for the implementation of the ETF Principles, spread across four different categories:
- Effective Product Structuring
- Liquidity Provision, and
- Volatility Control Mechanisms.
The focus of the Good Practices is on the structural aspects or ecosystem within which ETFs operate, rather than the products themselves.
IOSCO advises that the Good Practices do not comprise standards or recommendations, but are designed to support the ETF Principles and other relevant IOSCO standards and guidance by providing examples of their implementation.
How can the Maples Group help?
If you would like further information, please liaise with your usual Maples Group contact or visit our dedicated ETF Microsite.