FSB concerned about counterparty and liquidity risk in ETF market


The Financial Stability Board (FSB) has warned there are stability risks being created in some areas of the exchange-traded funds (ETF) market. It believes the recent acceleration in growth of synthetic ETFs in some Asian and European markets warrants further scrutiny. It is also worried about the potential impact of heavy ETF trading on the liquidity and price dynamics of the referenced securities, particularly if they do not have an active secondary market such as emerging market ETFs.

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