The Rise of ETFs: A Bubble in the Making?

The Rise of ETFs: A Bubble in the Making?

In December, the S&P 500 plunged, briefly falling as much as 20% below its all-time high. The U.S. stock market falling to the cusp of a bear market didn’t slow ETF (Exchange Traded Funds) investors :  nearly $50 billion inflow into U.S.-listed ETFs in December, propelling 2018 into the record books as the year with the second-largest inflows ever ($315.4 billion for the whole of 2018).

Since the flash-crash in May 2010, specific measures related to ETF’s were put in place as  ETFs played a significant part in the fall, with 68% of more than 21,000 cancelled trades coming from ETF investors. These measures included trading limits designed to prevent sudden changes in securities’ prices.

So with the continued massive inflow into ETF’s, is there a bubble in the making? Our experts give their view on the subject

Read More

Discover more insights on the Square news platform

Will The Money Market Fund Regulation Help Mitigate Run Risk ?

Will The Money Market Fund Regulation  Help Mitigate Run Risk ?

In the aftermath of the global financial crisis of 2008 the banking sector started to deleverage in order to comply with ever stricter capital and liquidity requirements imposed by the Basel Committee. Benefiting from the shift towards market-based sources of financing, shadow banking intermediaries such as money market funds were subjected to greater scrutiny as their credit intermediation role drastically increased within the global financial system in general and the euro area in particular.

As the classical bank credit contracted, the shadow banking sector acted as a buffer for the real economy by providing companies and governments with an alternative solution to secure short-term financing by spreading their risk exposure. Nonetheless the growing role and concentration of this less regulated sector and its ever-tighter links to the financial system raised some concerns amongst regulators.

Read More