Financial Regulatory Forum

Exchange traded funds’ growth raises multiple regulatory issues

By  Patrick Conroy, James Overdahl, Robert Patton and Raymund Wong; NERA Consulting, Thomson Reuters Accelus contributing authors. The views expressed are their own.

NEW YORK, Oct. 19 (Thomson Reuters Accelus) – Exchange-traded fund (ETF) strategies continue to increase in scope, involving active management and more sophisticated financial instruments. The increasing flexibility and versatility of ETFs have been accompanied by claims by regulators and others of destabilizing effects on markets and potential for abuse by market professionals. Moreover, the suitability of ETFs for retail investors and even institutions has become a source of greater concern. Furthermore, the size of the ETF market has more than tripled by number of ETFs, and more than doubled by net dollar value of assets, over the past four years, as you can see from this chart. (more…)

Where to put the ring-fence: implications of the UK bank report

By Peter Elstob

LONDON, April 12 (Complinet) – The Independent Commission on Banking said on Monday that separating retail and wholesale banking in some way might have “a number of potential benefits”, and it invited views on the best design for a “retail ring-fence”.

In an annex to its interim report, the commission illustrated one way to devise such a ring-fence. This is to divide banking business into three broad categories: activities which must take place within the ring-fence; activities which may take place within it; and those which may not take place within it.

But the example leaves a lot of room for interpretation. (more…)