Is the FSA right on the risks of ETFs?

Andrew Whiteley, managing director at Provisio It seems the FSA was trying to differentiate between physically replicated ETFs and all other ETPs, because of the risk involved with using counterparties. We err towards full replication for all our clients, simply because it gives the greatest level of security and is more straightforward to explain.   Some of the db x-trackers ETFs though, are 100% collateralised. That collateral might not necessarily match the ETF, and that poses a different risk and one the FSA has not grasped yet. But most ETF providers value their collateral on a da...