Industry Updates

ETF Wrap: The UK ETF market is back

A regulatory breakthrough from the Treasury, a French retail boom and consolidation by small issuers made headlines this week

Jamie Gordon

This week saw the UK take a step towards ending its non-splendid isolation from ETF markets as the Treasury granted equivalence to UCITS vehicles under the upcoming Overseas Fund Regime (OFR).

The regulatory update means when the OFR is implemented in April, all UCITS vehicles in the European Economic Area (EEA) will be able to passport to the UK.

Currently, the post-Brexit Temporary Permission Regime (TPR) only allows platforms with a ‘landing slot’ to market and distribute products to UK investors of all levels.

New entrants to ETFs, meanwhile, have had to endure the high costs and delays involved in being recognised under Section 272 of the Financial Services and Markets Act (FSMA).

The introduction of the OFR will provide the basis for long-term recognition of more than 600 ETFs currently listed in the UK, as well as future entrants to the market.

Exchange-traded France

Next, French retail participation in ETFs has hit an all-time-high, with retail adoption jumping 18% last year.

The number of individual investors using ETFs in the country jumped from 250,000 in 2022, to 296,000 in 2023.

In fact, in Q4 alone, the number was 34% higher versus the same quarter a year earlier.

Boutique issuers regroup

Finally, HANetf has merged three thematic ETFs into two other products, in a further sign of small issuers consolidating their best ideas.

The white label issuer announced its $7.1m Solar Energy UCITS ETF (TANN) and $3.4m HANetf S&P Global Clean Energy Select HANzero UCITS ETF (ZERO), would be absorbed by the $24.5m iClima Global Decarbonisation Enablers UCITS ETF (CLMA).

Elsewhere, the $11.5m Procure Space UCITS ETF (YODA) will be merged into the $45m Future of Defence UCITS ETF (NATO), which launched last year.

ETF Wrap is a weekly digest of the top stories on ETF Stream

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