Arthur Cox’s Hanrahan: CBI will not move first on ETF share class naming conventions

Two issuers have used the ETF share class structure in Ireland since it was introduced in 2017

Jamie Gordon

Stephanie Hanrahan, senior associate for asset management and investment funds at Arthur Cox, has said the Central Bank of Ireland (CBI) will not move to harmonise ETF share class naming rules until the European Securities and Markets Authority (ESMA) provides clarity.

In a recent ETF Stream webinar, titled ETF Investigations: Listed and Unlisted Share Classes: A Game Changer?, Hanrahan noted the CBI is aware of a divergence in interpretations between different regulators and has been discussing the issue in recent weeks.

The CBI currently applies ESMA’s UCITS ETF naming convention, whereby asset managers are required to use ‘UCITS ETF’ in the name of a sub-fund if it offers ETF and mutual fund share classes.

Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF), meanwhile, takes a more relaxed stance of only requiring the ‘UCITS ETF’ identifier to be used on ETF share classes, rather than at the sub-fund level.

The CBI’s decision to follow the ESMA requirement has been underlined by some as a major sticking point to the creation of more ETF share classes, with HSBC Asset Management the first to take up the structure last year since its introduction in Ireland in 2017.

Hanrahan said: “[The CBI] did comment in the context of offering ETF share classes and unlisted share classes in the same fund and said they really appreciated the economies of scale, the choice they bring to investors and they were very much in favour of harmonisation, but they will only change their view If ESMA provides clarification on the issue.

“They are not going to be a first mover on this and they do not believe the naming issue is deterring issuers from introducing those ETF share classes.

“There is a divergence, so potentially ESMA will [intervene]. It is just when that is the question.”

Speakers in this webinar include:

  • Stephanie Hanrahan, senior associate for asset management and investment funds, Arthur Cox

  • Andrew Craswell, European head of ETF services, Brown Brothers Harriman

  • Marco Montanari, global head of ETF and indexing capability, HSBC Asset Management

ETF Investigations is a new webinar series from ETF Stream which examines the key issues facing ETF investors in Europe. To watch a full replay of this webinar, click here.


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