Blackrock endorses calls for tougher rules on ETFs

iShares owner BlackRock has called for tougher regulatory rules for ETFs to make the sector more transparent.

Speaking at the FSA’s asset management conference in London last month, European Commission head of asset management Tilman Lueder warned of the dangers of synthetic ETFs and hinted that Ucits rules may be changed to deal with EC concerns.

ETFs have also been thrown into the spotlight recently after UBS incurred £1.5bn of losses, allegedly through unauthorised trading conducted by Kweku Adoboli in its global synthetic equity business.

In an interview with the Financial Times, Head of iShares in Europe Joseph Linhares says,: “ETFs started out as transparent, liquid, simple, vehicles but some have gone to opacity. We need to get back to full transparency across all the range of ETF products.”  

It is urging the industry to embrace higher hurdles on reporting and says that all trades, including over-the-counter deals which are carried out outside exchanges and which make up about two-thirds of ETF transactions in Europe, should be printed and made public, ideally on a daily basis.