US may target ETFs for collateral add-ons

Credit risk in creation and redemption process singled out by Finra

finra-new-york-2009
Speculation that Finra may ask banks to post collateral in order to trade FOP

US firms that buy and sell exchange-traded funds (ETFs) fear they may be in line for hefty new collateral requirements from US regulators when trading in international or less-liquid products.

Fears were sparked by a January 5 letter from the Financial Industry Regulatory Authority (Finra), which has warned it will "review the processes firms use to measure and monitor the impact of overnight counterparty credit risk" associated with creating and redeeming huge blocks of ETF shares on a free-of-

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