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Global Launches

ETF Express newsletter 22.07.22

The structures that underpin the ETF industry, indices, face regulatory change in the US and our US editor, Bailey McCann reported this week on how the SEC might look to the European model as they find a new regulatory path for what has become a huge industry.

Europe’s BMR is a global standard and offers flexibility in indexing and was arrived at as a response to the manipulation of LIBOR. Europe also has IOSCO’s Principles for Financial Benchmarks, another strong template for maintaining benchmark integrity. The major index providers in the US already comply with the EU’s BMR as they are all large, global operators.

McCann writes that the SEC has expressed concerns around the potential for index providers to front-run other market participants given the amount of information they have about corporate events and price action. The SEC is also worried about the amount of discretion index providers use when crafting indexes and wants to see more transparency around that process.

It will be interesting to see how the SEC resolves the many issues around the subject.

New white label ETF providers in Europe have turned out to be like buses – the old saying goes that none comes along and then you get two together. We spoke to Leverage Shares this week about their new white label offering with Raj Sheth, the firm’s commercial director explaining that their business model will aim to bring time to market to about three months with lower costs than what’s available today by >70 per cent. Quite the challenge for existing providers and then along comes Dublin-headquartered Waystone, which has a lengthy history in asset management corporate governance and is expanding into the ETF industry.

Trackinsight has published its annual global survey of the ETF industry, noting that thematic ETFs had a very good year in 2021. “Their initial success with investors prompted more providers to join the party, resulting in a flurry of new launches,” the firm says. Over 2021, more than 300 thematic ETFs were listed on exchanges around the globe, bringing the total universe to nearly 800 thematic ETFs as of end-of-year 2021.

“Along with the growth in the number of funds available, thematic ETFs saw their assets under management (AuM) skyrocket. By end of 2021, they broke through the USD250 billion mark, a three-fold increase since the beginning of 2020.”

Beverly Chandler, managing editor, ETF Express

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Companies in this issue

21Shares
DWS
Leverage Shares
Trackinsight

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