ASIC has updated its guidance on naming conventions for licensed Australian exchanges that admit exchange traded products (ETPs) following public consultation.
As proposed in Consultation Paper 356, ASIC has divided the naming conventions into two levels of labelling:
- Primary labels (‘ETF’ and ‘Structured Product’) based on product type; and
- Secondary labels (‘Active’ and ‘Complex’) for products with specific risks or strategies.
Structured products ones that are open-ended and structured as derivatives, redeemable preference shares or debt securities.
Active products are defined as buying and selling investments based on an active investment strategy or disclose their full portfolio holdings on a delayed basis under internal market making or material portfolio information disclosure models.
Complex products are defined as those that have leveraged or inverse exposures, employ short selling, use derivatives (other than for exchange rate hedging purposes), and/or otherwise meet the definition of a hedge fund in RG 240.
The updates to Information Sheet 230 stakeholder feedback from CP 356. Respondents supported ASIC continuing to provide guidance on ETP naming conventions but sought more detailed definitions for some of the labels, and the need to ensure consistency in interpretation by licensed exchanges.
The industry transition to updated ETP naming conventions will be overseen by licensed exchanges. ASIC understands that the exchanges need time to develop plans for the transition in detail, including identification of any areas where further consultation with industry or work with data vendors is required.
It is expected the exchanges to provide updates to the market about expected timeframes as they progress this work.
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