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Trump Signs ETF Research Bill

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President Donald Trump on Friday signed S. 327, the Fair Access to Investment Research Act of 2017, into law, allowing broker-dealers to provide research reports to clients on exchanged-traded funds.

The Senate passed the measure in early September. In introducing the legislation, Sen. Dean Heller, R-Nev., explained that “securities laws provide legal protections for broker-dealers to provide research reports for several asset classes such as listed stocks and corporate debt — but not for ETFs.”

The Fair Access to Investment Research Act creates “parity in the law by allowing broker-dealers to publish public research reports on ETFs, which millions of households invest in,” Heller said.

Ben Johnson, Morningstar’s director of global ETF research, told ThinkAdvisor in a Monday phone interview that the law “puts ETFs on equal footing with other securities,” with BDs “allowed to publish research now” on ETFs.

“The more intelligent people you have looking at these securities, the better it is for investors,” Johnson added.

Johnson noted that Morningstar plans to publish on Oct. 18 a report on “stewardship practices” on index mutual funds and ETF sponsors.

In late October or early November, another report will be released that looks at “some concerns around ‘common ownership’ of index funds and ETFs,” among the big firms like BlackRock. 

— Check out Overcoming Challenges Tied to ETFs on ThinkAdvisor.


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