Exchange Traded Funds – Central Bank Publishes Discussion Paper

• Exchange traded funds have assets in excess of US$4tn globally
• Ireland is the principal domicile for European ETFs
• Central Bank Discussion Paper leads an international exchange of views on ETFs

The Central Bank has today published a Discussion Paper on Exchange Traded Funds (ETFs).

Ireland is the largest European centre for Exchanged Traded Funds (ETFs), which are the fastest growing type of investment fund globally. ETFs have experienced exponential growth since they were first established in 1990 with more than US$4tn in assets globally as at the end of April 2017.

The Discussion Paper underpins an invitation to domestic and international Stakeholders to help inform global and European discussions on ETFs. It will contribute to the Central Bank’s leading contribution to those discussions and to the Central Bank’s role in maintaining stability and protecting consumers.

This Discussion Paper considers the distinctive design features of ETFs and how they operate to deliver a product that has become highly valued by investors. It considers how those features operate in good times and bad and seeks input on investor expectations.

The purpose of this Discussion Paper is to garner information from Stakeholders and other interested parties on any aspect of ETFs (whether covered in the Discussion Paper itself, or not). Stakeholders are requested to provide responses to the questions posed in the Discussion Paper along with any general observations on this topic.

Gerry Cross, Director of Policy and Risk said “ETFs are the most important product development the investment funds industry has seen in the last 20 years – this is evident from their exponential growth. This discussion paper sets out the results of substantial research conducted within the Central Bank of Ireland on the growth of ETFs. We encourage both industry and investor representatives and other regulators to enter into dialogue with us.”

The closing date for receipt of responses is 11 August 2017 and responses should be sent to [email protected]. The Central Bank currently intends to publish written contributions on its website.

Note:

An ETF is an investment fund which is not only admitted to trading on a regulated market but is also actively traded on the stock exchange or other markets.