Wednesday, 31 January 2018 10:48

ETFs at Risk of Manipulation

Written by
Rate this item
(0 votes)

(New York)

Vanguard, one of the preeminent global fund managers, has just gone on the record warning about a big and growing danger for ETFs. Vanguard says that “predators” are increasingly front-running ETFs at the expense of legitimate investors. Because most ETFs disclose their daily holdings, and are benchmarked to an index, they are susceptible to manipulation by those who trade ahead of the reconciliation. Vanguard hopes that regulators will not approve new rules which would demand even greater transparency in the ETF marketplace, as this could worsen the problem. Vanguard currently only discloses its holdings with a one-month lag to mitigate frontrunning, but could be forced to do so on a daily basis.

FINSUM: This is one of the areas of markets where transparency may actual work counter to the interests of the everyday investor.

Contact Us



Subscribe to our daily newsletter

We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…