Nicholas Soames: To ask the Chancellor of the Exchequer what steps he is taking to ensure the regulation of exchange traded funds. [76129]

Mark Hoban MP; Financial Secretary to the Treasury: Exchange Traded Funds are regulated by the Undertakings for Collective Investments in Transferable Securities (UCITS) Directives. UCITS provides a harmonised EU regulatory framework for collective investment schemes designed to ensure these products are appropriate for retail investors.

The Government are aware of the recent developments in the Exchange Traded Funds industry and the concerns around the suitability of some of these products for retail investors. The Government believes that it is important for the UCITS brand that products sold under the UCITS Directive are suitable for retail investors. We are working closely with the Financial Services Authority and Bank of England to analyse the risks associated with these products and consider what regulatory responses may be necessary.