EACB: ETF transparency essential after UBS
Thursday 22 September 2011 - by Andrew Hickley
Complex exchange-traded funds should be subjected to greater levels of transparency, especially in light of the rogue trader scandal from UBS, the European Association of Cooperative Banks has argued.
The association argues that investors should be made aware of all possible risks stemming from an ETF.
"We therefore agree with Esma's intentions on heightening transparency," the EACB's letter says.
"Once all transparency requirements are fulfilled, we believe that funds should be allowed to act freely within the boundaries of the Ucits regulation and its prospectus.
"We have confidence that this creates a diversified environment that fosters products suitable for each type of investor, therefore ultimately adding liquidity to the market."
The changes are especially relevant "in light of the recent scandal unfolding" at UBS, the letter says.
London police arrested 31-year-old Kweku Adoboli a week ago after the trader allegedly lost around $2.3bn (€1.7bn) in unauthorised trades in synthetic ETFs.
While Esma released the discussion paper in July, Adoboli's arrest came just a week before the consultation closed.
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