What is ETF good practice?
The International Organization of Securities Commissions, IOSCO has released its 108-page Good Practice guide most of which is common sense stuff.
The AP (authorised participants) community will be breathing a sigh of relief as it could have suggested more regulation of their business but it didn’t, instead suggesting for ETF issuers to avoid “exclusive arrangements” with APs and market makers, especially if this impacts the arbitrage mechanism.
It also stressed the importance of conducting due diligence when onboarding APs and market makers as well as monitoring them on an ongoing basis.
The report also suggested the need to improve the accuracy and usefulness of the INAV and finally, when considering the question of non-transparent ETFs, IOSCO encouraged regulators to ensure market participants have the right information to facilitate effective arbitrage.
Not exactly earth-shattering stuff but then that’s regulators for you.
Fund Launches and Updates
EMEA
Revolut has partnered with Berlin-based fintech Upvest to launch an ETF trading platform for retail investors across Europe. Customers of Revolt Securities Europe UAB will be able to access 158 ETFs for as little as €1 via its fractional shares offering. etfstream
GHCO and Mirae Asset Securities announce regulatory approval and set strategic growth plans for acquisition. etfexpress
FTSE Russell has announced it has launched the FTSE UK ESG Risk-Adjusted Index Series as part of the continued expansion of its multi-asset ESG and Climate index product range. etfexpress
AMERICAS
Grayscale expands ETF business, puts forward 3 new crypto funds. The new funds would invest in a wide range of different crypto-related assets including Bitcoin miners and privacy tech.
The company also said it launched a new arm of its business — the Grayscale Funds Trust — allowing it to manage many of its publicly traded financial products in-house. cointelegraph
PIMCO has launched the PIMCO Commodity Strategy Active ETF (NYSE Arca: CMDT). The new actively managed ETF invests in a broad range of commodity-linked instruments. etftrends
Global X ETFs has completed the conversion of two mutual funds into two actively managed emerging markets ETFs. The Global X Emerging Markets Great Consumer ETF (NYSE Arca: EMC) and the Global X Emerging Markets ETF (NYSE Arca: EMM). etftrends
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This week we hear from Anna Paglia, Global Head of ETFs and Indexed Strategies at Invesco.
Flows
ETFs backed by physical gold continued to record inflows in April, latest data from the World Gold Council (WGC) showed.
Net inflows totalled $824 million while holdings increased by 15 tonnes, the body noted. Total assets under management in gold-backed ETFs rose 1% to $221 billion by the end of April. forbes
ETFs and similar exchange-traded products (ETPs) experienced lower inflows in April, but sustainable funds rebounded and emerging markets remained in favour.
iShares said the ETF industry’s flows were $53 billion, down from $65.1 billion the month prior. The month saw net flows into fixed income down by $12.5 billion compared to March, although there was some pick up in corporate bond products.
Commodity flows were flat, similar to $1.6 billion the previous month. funds-europe
Corporate bond funds bounced back into favour last month as investors appeared to put fears of a mushrooming banking crisis behind them.
Investors had pulled money from corporate bond exchange traded funds for a second straight month in March, even as government bond ETFs sucked in a record $34.9bn, as savers sought refuge from the banking turmoil that had engulfed Credit Suisse and a string of regional US banks.
However, April flows seem to indicate that investors have sounded the all-clear, even as regional US bank stocks continue to trade at depressed levels.
In a dramatic reversal of risk appetite, net inflows to corporate bond ETFs surged to a healthy $9.1bn in April, according to data from BlackRock, cancelling out the prior two months’ outflows. ft.com
Noteworthy
The International Organisation of Securities Commissions (IOSCO) has finalised its ETF Good Practices which encourage regulators and the ETF industry to monitor the role of authorised participants (APs), enhance the usefulness of the iNAV and consider appropriate disclosure requirements. Iosco
Additional reads
Ontario’s securities watchdog suspended the registration of Emerge Canada Inc., an investment firm known for selling Toronto-listed versions of Cathie Wood’s popular exchange-traded funds.
The Ontario Securities Commission said the firm has failed to comply with its capital requirements since at least September and ordered it to wind down. bloomberg
21Shares has wrote a letter in response to the UK’s February consultation on crypto policy.
The letter agreed in part with the UK’s proposal to expand the list of “specified investments” to include crypto assets, but warned that there could be “unintended consequences” for the country’s public markets. blockworks
From behind the Desk
ETF education is a big thing for us and even though there is lots of material out there we feel that we are still only scratching the surface.
All of the reports, the podcast, the videos, the ETF bootcamp course are with a goal of adding value and providing more education but we still aim to do more.
If you have any suggestions on what else we should focus on them please let us know.
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