As of April, the nearly 20-year-old exchange-traded fund industry now has a trade group to represent its interests and to help educate investors as well as financial advisors about ETFs.
The establishment of the National Exchange Traded Funds Association (NETFA) is different from other attempts that have been made at establishing a trade group in that it appears to have the full backing of industry insiders.
However, NETFA won't represent the interests of the U.S. ETN industry, as ETNs are quite different from ETFs in structure and are regulated by a different division of the Securities and Exchange Commission.
The creation of NETFA follows a congressional hearing last October that sought to investigate risks associated with ETFs. The absence of any representative from the entire ETF industry at that Senate subcommittee hearing was a wake-up call for the industry, industry sources said.
At the same time, the new group hasn't yet convinced the top three U.S. ETF firms by assets—iShares, State Street Global Advisors and Vanguard—to join NETFA, according to a story published by the Financial Times. Officials at NETFA and the three ETF providers weren't available to comment.
The new group's chairman is John Hyland, chief investment advisor of United States Commodity Funds. Its vice chairman is Adam Patti, chief executive officer of IndexIQ.
Membership in NETFA is open to any exchange-traded fund issuer or sponsor. The group also has a class of membership for firms that are active in the ETF industry, but are not issuers of ETFs.