Legitimizing an Ambiguous Financial Innovation : the case of Exchange Traded Funds in France

The results of the study provide empirical evidence of the way ETF promoters were the driving force behind development of the market, exercising social control with relative discretion. Section 2 describes the nature of ETFs in general and the way they have evolved in France, with a focus on their ambiguities. Section 3 shows how promoters of ETFs convinced the industry of the value of this innovation, and negotiated rules with the regulator. Section 4 then investigates cooperation between competing issuers dealing with the ambiguities of the product to achieve its legitimization. Section 5 concludes by discussing the consequences of ETF market growth for the promoters' ability to continue unobtrusively exercising social control.