European ETF survey 2013

Regulations, taxes and other costs

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European ETF promoters face several obstacles to overcome in addition to the challenge of investor education. Despite relative optimism about the industry, regulations, attitudes on taxation and other costs could be a drag on growth.

A strong majority of survey interviewees feel that ETFs have been unfairly snared in regulation aimed elsewhere. The risks of cross-regulation remain, but the industry now also faces the prospect of new, targeted regulations.

The European Securities and Markets Authority (ESMA) recently published its amended proposals for ETF regulation. The plans are a mixed bag, and one proposal has particular significance for commodity ETFs.

For more details on these proposed regulations, download the full European ETF survey 2013 report.

Have ETFs been unfairly caught in cross-regulation?

Have ETFs been unfairly caught in cross-regulation?


The survey suggests that most European tax authorities currently take a neutral view of ETFs, but this may reflect unfamiliarity over their status as listed investment vehicles. Attitudes could still harden, especially as retail ETF sales increase.

To prevent this, the industry should educate tax authorities about the structure, performance and risks of ETFs. Promoters also need to ensure they are doing all they can to understand the underlying tax position of their investors.

Other costs

Other cost increases are likely to include the following:

  • Loss of income related to securities lending
  • IT systems upgrades to handle more complex processes
  • Limitations on the use of derivatives due to higher collateral requirements

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