The rapid rise and evolution of the global ETP industry has suddenly caught the attention of international regulators. In April, the Financial Stability Board, the International Monetary Fund and Bank for International Settlements all released reports warning of developments in the ETP market that could cause systemic risk, while making the industry more complex and opaque.
As outlined in ETFM's news section and in our Industry reaction piece, the regulators highlight potential risks stemming from both physically-backed and swap-based products. One over-arching issue that emerges from this, but is not elucidated as clearly as it could be in the reports, is the conflation of other exchange-traded products with ETFs. This is largely contributing to fears over opacity and complexity, as each type of product has a different risk and reward profile. Once a global, industry-wide set of parameters has been established for the different ETPs, then the risks relat...
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