Updates on (A) Synthetic ETFs and (B) the Implementation of UCITS IV
A recent Financial Stability Board note ("Potential financial stability issues
arising from recent trends in Exchange-Traded Funds (ETFs)" ) has raised, not
for the first time, the risks to investors supposedly inherent in synthetic
ETFs and whether or not those risks require active management by regulatory
authorities. Given the focus on counterparty risk post-Lehman, and on the need
to protect retail investors investing in "complex" products, the question is
being asked again as to whether or not the particular risks generated by these
funds require special mitigating measures and restraints.
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