In response to the European Securities and Markets Authority’s paper on guidelines for ETFs and structured products, the IMA is questioning why it insists on singling out certain types of Ucits products while excluding others.
Julie Patterson, a director at the IMA, said: “Ucits are already subject to detailed regulation. Regulatory intervention should happen only where there is a clear market failure, but we see no evidence of this.
“Regulators are concerned about ‘complexity’ in retail products. But complexity does not necessarily equate to risk. Sophisticated investment strategies often mean less risk for investors in terms of the expected return.”
She concludes: “All retail products should be subject to similar rules on disclosure and selling. The European Commission’s PRIPs [Packaged Retail Investment Products] initiative seeks to achieve just that, but we are concerned that it is being treated with lower priority than it warrants.”
The IMA’s response follows the reaction by a number of overseas regulators who want to impose greater rules and regulations onto ETFs. These regulators include the Bank of England, the IMF, the Financial Stability Board and the FSA who have all cautioned against ETF structures when these structures often follow similar practices to their long only counterparts.