The Australian Securities and Investments Commission (ASIC) has released an update to naming guidance for licensed Australian exchanges on exchange-traded products (ETPs) following a round of public consultations carried out in the beginning of 2022.
According to the new guidance, the exchange-traded products naming is divided into two separate levels – primary and secondary. The primary labels are be based on product type (ETF and Structured Product) and secondary labels are for products with specific strategies or risks (Active and Complex).
ASIC noted that respondents sought more detailed definitions for some of the labels, and the regulator recognized the need to ensure consistency in interpretation by licensed exchanges.
Furthermore, the Australian regulator has decided to revise the definitions of ‘Active’ and ‘Complex’ products and specifying that all labels should appear at the end of the product trading name and secondary label should appear immediately before the primary label. ETP products should now be named “XYZ Active ETF” (or XYZ Complex ETF).
ASIC Commissioner Danielle Press said:
Naming conventions for ETPs are one of the ways that ASIC and licensed exchanges help to ensure that admission and monitoring standards for ETPs continue to support fair, orderly and transparent markets, particularly in the context of ETPs that have unique or novel features.
The overall reduction in the number of defined labels in our guidance is intended to encourage licensed exchanges and ETP issuers to focus more attention on whether the full name of the product is true to label.
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