ICFR calls for action on synthetic ETFs

The International Centre for Financial Regulation (ICFR) has highlighted the need to further assess the potential systemic risks emanating from Exchange Traded Funds (ETFs). The first Financial Stability Report (FSR) to be produced by the UK's new super-regulatory body, the Financial Policy Committee (FPC) covers the issue of ETFs, which have shown a remarkable growth in the last three years. As the report notes, ETFs started off around 1990 by using investors' cash to purchase the basket of securities comprising the index from the market - the "physical" replication. These are typically si...