The ETF innovation challenge

In the world of financial products, the words ‘complexity' and ‘retail' do not make good bedfellows. Once the two appear together, a third, ‘regulation', is never far behind. And so it is with exchange-traded products (ETPs), which have drawn the attention of UK and US regulators, as complexity and retail uptake simultaneously increase. Despite considerable improvements in transparency and efforts to educate investors, innovation may simply be moving too fast, increasing the scope for misunderstanding or misuse. It could also force regulators to act, potentially to the detriment of the...