FTSE and Koris promote benchmark transparency

FTSE Group (FTSE) and Koris International (Koris) have signed a partnership agreement to provide institutions with greater insight, information and education on FTSE, FTSE MTS and Russell Indices tracked by European listed exchange-traded funds (ETFs).

The investment advisory company’s platform will increase transparency, facilitate analysis of ETFs and offer continued education on this rapidly evolving market, said Sudir Raju, managing director, ETP relationship and industry classification benchmark (ICB) at FTSE.

“FTSE believes that education is vital for end investors, as well as being in line with the current regulatory environment,” he said. “[The European Securities & Markets Authority] (Esma) requires that we provide information concerning the index methodology, constituents, etc. It is important to FTSE that the end client understands how our indices work.”

This kind of initiative is a reflection of how the market has evolved, said Raju. “Ten years ago, products were linked to traditional market cap indices and most investors understood how they worked,” he said. “Nowadays, index-linked products have become more sophisticated and use more complex underlying benchmarks such as smart beta indices, and we have to make sure we provide the right tools for investors to make informed decisions.”

This applies to all FTSE indices, including those used as reference by structured products and not just those tracked by ETFs, said Raju. “TrackInsight provides data around ETF issuers and is a way to provide further access to information about FTSE indices,” he said. “This announcement is all about educating investors and providing them with the tools to understand how the underlying indices work. TrackInsight is not replacing FTSE’s own information and initiatives.”

FTSE index data will be included within TrackInsight, an online European ETF analysis platform operated by Koris. TrackInsight’s users will be able to access more detailed information including index weighting methodology, historical index returns and exposures analysis, “enabling quick and enhanced look-through” on the inherent features of benchmark indices replicated by ETFs.

The agreement represents a step forward for the institutional investor community, which has been calling for greater transparency and information on the indices associated with investment products, said Jean-René Giraud, co-founder and chief executive of Koris International in a joint statement.

FTSE and Koris have also announced a collaboration agreement on a number of pan-European initiatives designed to help educate institutional investors on the various qualitative and quantitative dimensions of European ETFs.

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FTSE and Koris promote benchmark transparency