Industry Coalition Champions Clarity Through ETP Classifications  

Proposal calls on exchanges to standardize taxonomy to increase transparency for the benefit of investors

NEW YORK--()--A coalition of leading asset managers announced today an initiative that calls for clearer identification and categorization of exchange-traded products (ETPs). The coalition has asked Cboe, Nasdaq and NYSE to implement a solution that more accurately reflects the complexities, risks, and structural features inherent in different types of ETPs.

The majority of ETPs are classified as exchange-traded funds (ETFs) under the proposed ETP classification, accounting for nearly 96% of the $3.65 trillion U.S. ETP AUM and 77% of the 2,400 products1. The approximately 550 remaining ETPs offer investors a variety of different exposures and strategies, including those with leveraged or inverse returns. Due to the absence of an ETP classification system, ETF has become a blanket term for a range of products that can lead to significantly different outcomes for investors.

The financial institutions collaborating on this industry-led initiative manage approximately 90% of the U.S. ETP market and include BlackRock, Charles Schwab Investment Management, Inc., Fidelity Investments, Invesco, and State Street Global Advisors.

“At its core, this effort is about increasing transparency for investors,” said Samara Cohen, Co-Head of iShares Global Markets and Investments at BlackRock. “One of the benefits of ETPs is the breadth of access they offer to the world’s investment markets. However, the presence of multiple product structures can be confusing and through this initiative we want to introduce a shared language to help investors know what they own.”

After extensive discussions and evaluation, the coalition has developed a naming convention that aims to better reflect the underlying strategies of the product: exchange-traded funds (“ETFs”), exchange-traded notes (“ETNs”), exchange-traded commodities (“ETCs”) and exchange-traded instruments (“ETIs”). For more information, see the chart below.

“As the ETP industry continues to mature, the classification and categorization of the ETP product structure should mature as well, ensuring that investors have a clear view of the differentiation between an ETF, and other structures like ETNs, ETCs and ETIs,” said Anna Paglia, Head of Legal, U.S. ETFs at Invesco.

“Investors have embraced the transparency proposition offered by ETFs in that it enhanced their ability to make better informed investment decisions,” said Rory Tobin, Global Head of SPDR ETF Business at State Street Global Advisors. “As the ETP industry has grown, and new and innovative structures have emerged, a robust industry categorization system is required, providing investors with a toolkit to better inform their decision making as to the risk characteristics inherent in different ETP structures.”

In September 2019, the Securities and Exchange Commission (SEC) unanimously approved Rule 6c-11 (the “ETF Rule”) to help support future ETF growth and increase ETF market transparency. While the SEC did not include an ETP classification scheme as part of the final ETF Rule, the Commission encouraged market participants to continue engaging with their investors, with each other, and with the SEC on ETP classifications.

Recommended ETP classifications





Exchange-Traded Fund

  • A registered open-end management investment company under the Investment Company Act (operating under Rule 6c-11 or an applicable SEC ETF exemptive order) that: (i) in the normal course issues (and redeems) creation units to (and from) authorized participants in exchange for a basket and a cash balancing amount (if any); and (ii) issues shares that are listed on a national securities exchange and traded at market-determined prices;
  • Includes funds that transact on an in-kind basis, on a cash basis, or both; and
  • Excludes ETNs, ETCs and ETIs (as defined below).


Exchange-Traded Note

  • A debt security issued by a corporate issuer (i.e., not issued by a pooled investment vehicle) that is linked to the performance of a market index and trades on a securities exchange;
  • May or may not be collateralized, but in either case, depends on the issuer’s solvency to deliver fully to expectations; and
  • Excludes products that seek to provide a leveraged or inverse return, a return with caps on upside or downside performance or “knock-out” features.


Exchange-Traded Commodity

  • A pooled investment vehicle with shares that trade on a securities exchange that invests primarily in assets other than securities and financial futures;
  • The primary investment objective of an ETC is exposure to traditional commodities and non-financial commodity futures contracts; and
  • May hold physical commodities (e.g., precious metals) or invest in non-financial commodity futures or commodity-based total return swaps.


Exchange-Traded Instrument

  • Any pooled investment vehicle, debt security issued by a corporate issuer, or similar financial instrument that trades on a securities exchange that has embedded structural features designed to deliver a return other than the full unlevered positive return of the underlying index or exposure (for example, products that seek to provide a leveraged or inverse return, a return with caps on upside or downside performance or “knock-out” features); or
  • All products not captured by the ETF, ETN or ETC classification fall under ETI.

About BlackRock

BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, our clients turn to us for the solutions they need when planning for their most important goals. As of March 31, 2020, the firm managed approximately $6.47 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit | Twitter: @blackrock | Blog: | LinkedIn:

About iShares

iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 900+ exchange traded funds (ETFs) and $1.85 trillion in assets under management as of March 31, 2020, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock, trusted to manage more money than any other investment firmi.

i Based on $6.47 trillion in AUM as of 3/31/20

About Charles Schwab Investment Management, Inc.

As of December 31, 2019, Charles Schwab Investment Management managed approximately $468.9 billion on a discretionary basis and approximately $18.1 billion on a non-discretionary basis. More information is available at

About Invesco Ltd.

Invesco is a global independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. Our distinctive investment teams deliver a comprehensive range of active, passive and alternative investment capabilities. With offices in 25 countries, Invesco managed $1.1 trillion in assets on behalf of clients worldwide as of April 30, 2020. For more information, visit

About State Street Global Advisors

For four decades, State Street Global Advisors has served the world’s governments, institutions and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world’s third-largest asset manager with US $2.69 trillion* under our care.

*This figure is presented as of March 31, 2020 and includes approximately $51.62 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.

Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by visiting or Read the prospectus carefully before investing.

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This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.

Shares of ETFs may be bought and sold throughout the day on the exchange through any brokerage account. Shares are not individually redeemable from the ETF, however, shares may be redeemed directly from an ETF by Authorized Participants, in very large creation/redemption units.

The iShares Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). BlackRock is not affiliated with Charles Schwab Investment Mangement, Inc. Invesco Ltd., or State Street Global Advisors.

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1 Markit, BlackRock as of March 31, 2020


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