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Regulator body to probe ETFs amid market fears

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Regulator body to probe ETFs amid market fears

The global body of securities regulators will launch another investigation into the exchange-traded fund industry in early 2018, as the sector's growth prompts fears that it could destabilize markets, the Financial Times reported Dec. 2.

The Madrid-based International Organization of Securities Commissions is planning to recommend further scrutiny of ETFs as a part of its remit to protect investors, promote fair and efficient markets and reduce systemic risk.

Global net inflows into ETFs totaled $553 billion before the end of November, compared to $379 billion in the whole of 2016, according to figures from asset manager BlackRock cited in a separate FT report.

IOSCO also launched an investigation into the liquidity risks of mutual funds and ETFs earlier in 2017, and is due to publish its initial findings in the next few weeks.

The second investigation aims to cover a broader analysis, considering whether the industry growth will lead to serious market distortions and examining liquidity and valuation issues.