In its 2013 Annual Report, the U.S. Financial Stability Oversight Council (the "FSOC") summarized, as part of its review of investment funds, activities in exchange-traded products ("ETPs"). ETPs include exchange-traded funds and exchange-traded notes. According to the report, the number of U.S.-listed ETFs grew significantly in 2012 to 1,131 products, with ETF assets growing by 22% to $1.29 trillion. The report also noted the expansion of ETPs in recent years into a variety of different types of underlying assets, and the concentration of ETPs among a limited number of sponsors.
The FSOC noted several potential innovations in ETPs. For example, some ETP providers have approached the SEC with proposals for new ways to operate actively-managed ETPs, such as disclosing holdings less frequently or disclosing a portfolio that closely replicates an underlying index daily. An approach of this kind could balance the need for protecting the ETP provider’s active strategy with the need to create both a transparent and a liquid basket of assets. Currently, actively-managed ETFs and certain index-based ETFs disclose their holdings on a daily basis.
The Annual Report is available at: http://www.treasury.gov/initiatives/fsoc/Documents/FSOC%202013%20Annual%20Report.pdf.