A third boogeyman to the recent volatility in the stock market has just been named. In addition to high frequency trading and the lack of an uptick rule, leveraged ETF’s have been identified as a volatility culprit. The WSJ reports:
“U.S. securities regulators are looking into whether turbocharged exchange-traded funds amplified August’s topsy-turvy swings in the stock market. Securities and Exchange Commission officials have had discussions with firms that trade ETFs, asking questions about whether they added to the market’s volatility.” Read Article here
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