As Secrecy Laws Change, Will International Finance ETFs?

As regulators continue to put pressure on global financial institutions to be transparent and aid in catching “income reporting evaders, ” how will global financial exchange traded funds (ETFs) be effected?

Most recently, the Swiss government agreed to hand over private bank information of 4,450 American UBS clients to American regulators, putting a damper on Swiss banks’ secrecy policies.  As a result, Swiss private bankers are turning their attention to emerging markets, such as Russia, Asia and the Middle East, stressing their expertise and financial stability, states Ghana Business News.  The litigation and controversy is damaging the reputation of Swiss banks and is forcing the nation to draft up new treaties.

In addition to this, it appears that investors from Europe, South Africa and Asia are the first to gain inquiries in equity participation for international banks that are in trouble.  Some big names like the Commercial Bank of China have gone so far as to hire accounting firms to run forensic audits on the international banks.

A combination of the aforementioned can truly be detrimental to the global financial sector.  An ETF that could be influenced is the WisdomTree International Financial Sector Fund (DRF) which is up 31.9% year-to-date and above its 200-day moving average.

• iShares MSCI Switzerland (EWL): up 10.1% year-to-date; UBS 5.6%

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