The naming of exchange-traded products (ETP) requires further clarification and clearer definitions, according to the Australian Securities and Investments Commission (ASIC), which is seeking feedback on updating its guidance to product issuers and stock exchanges.
The corporate regulator has released “Consultation Paper 356 ETP naming conventions: Updates to INFO 230” (CP 356) to gather feedback for its plans to update “Information Sheet 230 Exchange-traded products: Admission guidelines”.
“ETPs have opposing structures, features, strategies and risks to traditional warrants and listed products – including listed investment trusts – which require a new standard labelling protocol different to other listed products,” ASIC said.
“Based on feedback over several years from product issuers, financial advisers, industry bodies and licensed exchanges, we have reviewed our guidance on ETP naming conventions in INFO 230 and concluded there is potential for improvement and clarification.”
As part of the consultation paper, ASIC has asked market operators and issuers to consider its proposal that a revised naming convention would have two levels of labelling, with the primary labels based on product type and secondary labels for specific risks or strategies.
The paper also seeks to clarify the role of licensed exchanges authorised to admit ETPs to quotation.
“CP 356 will assist ASIC to gather feedback and better understand stakeholders’ experiences to date with ETP naming conventions in INFO 230. We intend to revise our guidance in a way that simplifies the naming conventions and promotes flexibility for the next phase of ETP market development,” it said via a website update.
After submissions close on 3 March, ASIC will consider feedback from stakeholders and issue a report, with a feedback report with a final update to INFO 230 to follow that publication.
