ETF explosion deserves detailed regulatory focus

The perceived simplicity of exchange-traded products can lure investors into overtrading and high transaction costs

The explosion in the use of exchange-traded funds threatens to make the industry a systemic risk. Regulation has focused too narrowly on the problems of 2008, overlooking the huge growth in new products since then.

ETFs were a relatively small part of capital markets during the last crisis but, since then, have taken off in complexity and scale.

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