Central Bank of Ireland opens discussion on ETF risk and regulation

Predicts €720bn market value by 2021

The Central Bank of Ireland (CBI) is seeking industry feedback on the regulation of its €287bn ETF industry, which it says could grow to as much as €720bn by 2021.

Increasing demand for ETFs has prompted further consideration of potential unique risks they could pose, the CBI said. In a discussion paper gauging industry participants' views, the regulator's list of concerns included transparency, dealing arrangements, and the potential issues associated with the inclusion of both listed and unlisted share classes in an ETF. The paper also looked at the impact of ETFs on market liquidity. It reviewed a range of studies on this issue and identified apparent complexities, which appear to suggest that the impact of ETFs on market liquidity can vary s...