Norway’s sovereign wealth fund says there’s a need for new rules to limit the risks spreading from the growth in exchange-traded funds.

The $860 billion fund is concerned over the growing impact ETFs have on the underlying securities they are connected to, said Oeyvind Schanke, chief investment officer for allocation strategies at Norges Bank Investment Management, the department in the central bank in Oslo that runs the fund.

A good step has been imposing circuit breakers on exchanges, “but the interaction between ETFs and underlying securities is also important,” he said in an interview after participating at a conference in Qatar. The interaction between futures and the ETFs underlying securities is increasing "so we probably need some set of rules that take care of that inter- connectivity." 

The fund has gone over to more block trading to hide its steps from other traders seeking to front run its moves, which has cut costs by 50 percent since 2013, according to Schanke.

ETFs have come under growing scrutiny after Aug. 24, when they contributed to a U.S. market panic that at its worst erased about $1.2 trillion of market value. Assets in ETFs, one of the fastest growing businesses in the money-management industry, have increased almost seven-fold over the past decade, largely because investors view them as easier to trade and cheaper than traditional mutual funds.

Norway’s fund, which last year traded $200 billion in stocks, is trying to navigate an increasingly complicated environment of ever faster trading. Schanke also called on regulators to a crack down on so-called co-location, or when high-frequency traders put their computer servers next to exchange servers to gain a time advantage.

"It is in our view an oversight from the regulators that this has been allowed to go on for so long,” he said in a speech.