Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

ASIC lifts active ETF ban

By Cameron Micallef · December 13 2019
Reading:
egg
egg

Invest

ASIC lifts active ETF ban

By Cameron Micallef
December 13 2019
Reading:
egg
egg
ASIC lifts active ETF ban

ASIC lifts active ETF ban

author image
By Cameron Micallef · December 13 2019
Reading:
egg
egg
ASIC lifts active ETF ban

ASIC has lifted its halt on active managed ETFs that do not disclose their portfolio holdings daily and engage in internal market making, despite growing concerns within the sector.

The freeze on new active ETFs entering the market began in July with ASIC raising concerns about “internal market makers” and non-disclosure of daily holdings.

Internal market making occurs when the fund’s responsible entity acts as the market maker for its own fund on the fund’s behalf, either by submitting bids and offers itself or by engaging a transaction agent that executes its instructions.

In a statement, ASIC noted that it “intends to work with market operators and other stakeholders to ensure new funds being admitted for quotation use compliant models and changes that are required to existing models are made as soon as possible”.

“In some models, market-maker quotes are lead indicators of changes to fund portfolio values rather than responding to publicly available information such as indicative net asset values (iNAVs),” ASIC’s review noted.

Advertisement
Advertisement

Funds using the model tend not to disclose their portfolio holdings daily and are also usually actively managed funds. 

But funds engaging in internal market making only represent around 6 per cent of funds under management in exchange-traded products.

The regulator has asked that they ensure that: 

  • input for market-making quotes is a reference price or other information that is publicly available
  • internal compliance and supervision arrangements are adequate
  • information barriers are established to ensure decisions to buy or sell units not made by persons or systems with knowledge of the current portfolio holdings
  • there are adequate arrangements for identifying and responding to instances of substantial information asymmetry in the market, which may include cessation of market-making activities or requesting a trading halt
ASIC lifts active ETF ban
ASIC lifts active ETF ban
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article
author image

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Nest Egg.

Read more

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.