France’s Autorité des marchés financiers (AMF) is slated to update its policy in relation in exchange-traded funds (ETFs), culminating in the release of three proposed amendments to public consultation – the consultation will remain open for upwards of two months, starting on May 24, 2017.
The consultation follows after a period of strong growth for ETFs, which have increased seemingly worldwide. ETFs have experienced a strong uptick in Europe but also in the United States and Asia as investors have flocked to the asset class. On a global scale, assets under management jumped to EUR 2,852 billion in Q3 2016, which constituted a 20.0 percent growth in the past four years.
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In light of such rapid growth, the AMF has been monitoring the industry and a number of developments in this market as in tandem with available liquidity and financial stability. The group feels that implementing a public consultation is a necessary step that will help shore up any potential issues facing the market, detailing three specific proposals.
The expanded options suite is available to French ETFs. As such, in certain market situations the AMF is looking to repaying redemption requests on the primary market, with the exception of liquidations.
Additionally, another proposal entails the implementation of an action plan in the event of significant valuation or liquidity problems in the underlying-assets market, with a view to possibly suspending subscriptions and redemptions. Finally, the AMF is drawing up a continuity action plan in the event of a default or an event affecting a given counterparty.