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<oembed><version>1.0</version><provider_name>naked capitalism</provider_name><provider_url>https://www.nakedcapitalism.com</provider_url><author_name>Yves Smith</author_name><author_url>https://www.nakedcapitalism.com/author/yves-smith</author_url><title>ETFs as Source of Systemic Risk? | naked capitalism</title><type>rich</type><width>600</width><height>338</height><html>&lt;blockquote class="wp-embedded-content" data-secret="AMNr1bOA11"&gt;&lt;a href="https://www.nakedcapitalism.com/2011/04/etfs-as-source-of-systemic-risk.html"&gt;ETFs as Source of Systemic Risk?&lt;/a&gt;&lt;/blockquote&gt;&lt;iframe sandbox="allow-scripts" security="restricted" src="https://www.nakedcapitalism.com/2011/04/etfs-as-source-of-systemic-risk.html/embed#?secret=AMNr1bOA11" width="600" height="338" title="&#x201C;ETFs as Source of Systemic Risk?&#x201D; &#x2014; naked capitalism" data-secret="AMNr1bOA11" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"&gt;&lt;/iframe&gt;&lt;script type="text/javascript"&gt;
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</html><description>Surprisingly little note has been paid to the discussion of ETFs in three reports issued last week by international regulatory heavyweights, namely, the IMF, the BIS, and the G20 Financial Stability Board.   Make no mistake: the authorities are worried. The BIS report, for instance, has an unflattering comparison on its first page, noting that now ETFs seem to be serving the same function for institutional investors now as structured credit products did in 2002-2003, with dealers pushing the envelope as far as "innovation" is concerned. The Financial Stability Board was more straightforward, flagging its concerns that ETFs could pose a threat to stability in its report title.  The regulators discussed the fact that "ETF" no longer stands for a single product. Most investors probably assume that an ETF is more or less a mutual fund, when in fact Eurobank affiliated groups' products are typically synthetic (that is, they use derivatives rather than securities. There are even more structural variants, but we'll stick to these two for the purpose of this post). And too often, the relationship between the ETF and the sponsor is not arm's length.</description></oembed>

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