Tags: etf | trading | chaos | turmoil

ETF Industry Warns SEC That Volatile Trading Could Happen Again

Image: ETF Industry Warns SEC That Volatile Trading Could Happen Again

Friday, 11 Mar 2016 11:23 AM


A group of 18 top exchange-traded fund issuers, traders and other financial firms asked the U.S. Securities and Exchange Commission in a letter for action to prevent a repeat of the irregular volatility seen last Aug. 24.

Minutes after trading started that day, some ETFs and stocks sank 30 percent or more from the previous day's closing level. Prices quickly recovered later in the day after many investors had sold at deflated prices. Trading in 327 ETFs was halted.

Saying the industry had "reached a consensus," the letter said "we are concerned that the markets are susceptible to a similar event occurring at any time."

The letter was signed by executives from BlackRock Inc., Vanguard Group, J.P. Morgan Chase & Co., State Street Corp. and Charles Schwab and Co. Inc.

The group argued that inconsistent rules between exchanges governing when stocks and ETFs are halted and when trades are declared invalid "contributed" to the trading turmoil last year. They asked SEC chair Mary Jo White to intervene to bring those rules in sync.

Exchanges halt trading when stock and ETF prices move violently but do not necessarily rely on the same rules in deciding when and how to pause trading.

"We don't necessarily see these as areas the exchanges should be competing on," said Joel Dickson, head of investment research and development at Vanguard. "Many different people with many different motivations have a common goal and approach in saying this will be better for all investors in the market."

Neither the New York Stock Exchange, where most U.S. ETFs are listed, nor any other major exchanges were in the group that signed the letter. Spokeswomen for NYSE and the SEC did not immediately respond to a request for comment.

© 2017 Thomson/Reuters. All rights reserved.

   
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A group of 18 top exchange-traded fund issuers, traders and other financial firms asked the U.S. Securities and Exchange Commission in a letter for action to prevent a repeat of the irregular volatility seen last Aug. 24.
etf, trading, chaos, turmoil
289
2016-23-11
Friday, 11 Mar 2016 11:23 AM
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