The European Commission has expressed concern that some providers may be projecting synthetic exchange-traded funds (ETFs) as safe, using Ucits regulations as a “shield”, Financial Times reports. Being Ucits-compliant means those funds are suitable for sale across the European Union. Regulators are also concerned whether synthetic ETFs, which use derivatives to offer the return of an index, complied fully with the regulations that applied to Ucits funds. Tilman Lueder, head of the asset management unit, said the commission was considering if rules for collateral, swap transactions and securities lending needed improvements.

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