SEC monitors ETFs; iShares' senior management moves

Over-the-counter brings you news and views on some of the activity in the ETF market.

In the US Securities and Exchange Commission's (SEC) request for comments on the use of derivatives in ETFs and other funds, it highlights the example of the Ucits regulations in Europe and the adoption of similar measures in Singapore, where Ucits is recognised.

The SEC announcement comes at the end of a wave of scrutiny of ETFs by multiple European regulatory bodies; particular attention has been paid to the use of derivatives in funds.

In arguing against some of the issues raised in the various regulators' reports, European ETF issuers have avidly insisted that the Ucits rules limit the amount of risk to the end investor.

The SEC's decision to bring the Ucits rules to the attention of the US market could be seen as an endorsement of them. The regulator outlines parts of the Ucits rules on derivatives and asks whether a similar approach should be applied in the US. The SEC, it seems, shares the European providers' views.

BlackRock's Mark Wiedman will become global head of iShares, replacing Mike Latham who will become chairman, a source close to the company has confirmed.

Wiedman is currently a managing director in charge of corporate strategy in New York. In his new role he will report to Robert Fairbairn, head of the global client group at BlackRock.

The SEC has asked ETF traders for comments about how trading of leveraged funds may have affected the market in August, the Wall Street Journal reported last week.

Although there is no suggestion that ETFs caused market volatility, the SEC wants to find out if they could have added to it, according to WSJ.

It seems that it was only a matter of time before someone looked to blame ETFs for worsening the August market swings. Regulators and the media alike have examined ETFs over recent months, asking a myriad of questions from whether they pose a systemic risk to the financial system, to if they could be the next CDO (collateral debt obligation).

In ETFM's September comment piece, it was noted that no one had yet blamed ETFs for the volatility - it was too good to last.