EFAMA: ETF liquidity fears are 'misplaced'

Trade body flags mitigating factors

Regulators should implement a "classification system" to distinguish between exchange-traded funds (ETFs) and other exchange-traded products (ETPs) rather than focusing on "misplaced" fears over liquidity and counterparty risks, an industry body has claimed.

The European Fund and Asset Management Association (EFAMA) said investors require "a clearer distinction" between ETFs - which, in Europe, it says, are "essentially UCITS-licensed products" - and other ETPs in order to assess the risks inherent in each vehicle. The body suggested introducing a classification system, which would "help investors more readily assess the risks inherent to each type of ETP, as well as aid regulators to better focus their efforts at protecting investors and guarding financial stability". Currently, regulators and the European Central Bank (ECB) are assessin...