• Deborah

Since the 2013 IOSCO report on Principles for the Regulation of Exchange Traded Funds (ETFs), the ETF market has significantly grown with increasing new products and more complex investment strategies including exposures to novel and less liquid asset classes.


In response, IOSCO reviewed various issues to identify any potential gaps in the 2013 ETF Principles. IOSCO concluded that the Principles remain relevant, however, recommended a set of 11 Good Practices for putting the Principles into practice. The practices pertain to four general categories: effective product structuring, disclosure, liquidity provision and volatility control mechanism.


Proposed practices and considerations

  1. Effective product structuring: whether a particular asset class or strategy is appropriate for the ETF offering, including characteristics of the asset class / strategy, and underlying market and local circumstances.

  2. Transparency : level and frequency of portfolio and basket disclosure

  3. Enhanced accuracy and usefulness of intraday net asset value (iNAV) : support to investors in valuing an ETF alongside other types of portfolio disclosure

  4. Due diligence and ongoing monitoring of authorized participants (APs) and market makers (MMs)

  5. Arrangements for facilitating arbitrage, including contingency plans

  6. Conflicts management

  7. Adequacy and appropriateness of disclosures

  8. Fees and expenses disclosures

  9. Disclosures to differentiate ETFs from other exchange traded products (ETPs) and collective investment schemes (CIS)

  10. Liquidity provision - secondary marketing trading and market making activities

  11. Volatility control mechanisms (VCMs) -


Comments on the report may be submitted on or before Monday July 6, 2022 to IOSCO-ETF-consultation@iosco.org.


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