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iShares Warns On Synthetic ETF Risks

Europe’s largest ETF manager iShares has cautioned that the providers of some ETFs are not taking appropriate measures to prove their products are safe.

Europe’s largest ETF manager iShares has cautioned that the providers of some ETFs are not taking appropriate measures to prove their products are safe, Financial News reports. The warning follows renewed pressure on the European banking sector, raising the possibility that a bank backing the derivatives used to construct synthetic ETFs could default on the sector.

However, regulators, led by Financial Stability Board, raised concerns about the structures that fail to clarify how ETFs would fair if the banks failed. As per the European Securities and Markets Authority, limits could be put on the distribution of complex ETFs to retail investors.

Click here for the story from Financial News.

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