Comments on: Some ETFs Suspend Trading In Europe; Could It Happen Here?

By: Tom Lydon

Tom Lydon — Mon, 13 Oct 2008 17:52:46 +0000

Hi Shanker,

According to Morningstar’s Scott Burns: Investors in ETFs can breathe somewhat easier because shares represent a stake in an investment portfolio. If an ETF sponsor like State Street or Barclays went down, at worst the investors would receive cash or the shares, Burns said.

By: Shanker Menon

Shanker Menon — Sat, 11 Oct 2008 00:17:24 +0000

Some ETFs do not fully replicate the index but take a sampling like Ishare MSCI Singapore. What happens then if Barclays collapses?

Thx Shanker

By: Tom Lydon

Tom Lydon — Wed, 01 Oct 2008 21:31:56 +0000

We stumbled across an article today that addresses this very question. According to Morningstar’s Scott Burns: Investors in ETFs can breathe somewhat easier because shares represent a stake in an investment portfolio. If an ETF sponsor like State Street or Barclays went down, at worst the investors would receive cash or the shares, Burns said.

Sorry for the delayed reply, and I hope this helps!

By: Anonymous

Anonymous — Wed, 24 Sep 2008 22:20:18 +0000

Thanks, this would be a very interesting question. We seem to know what may happen if an ETN fails. But if something like FXI fails, who knows what happens… Also, what about more complex ETFs like CYB or commodity ETFs or bond ETFs? Are we stuck with futures contracts that we would have to deal with ourselves or do we just eventually get the cash value of the investments? I’m looking forward to your answer.

By: Tom Lydon

Tom Lydon — Wed, 24 Sep 2008 14:38:55 +0000

We’re researching this exact answer and will get back to you!

By: Anonymous

Anonymous — Thu, 18 Sep 2008 19:30:55 +0000

What would happen if State Street collapses – i.e. if the actual ETF issuer collapses? If I own an ETF such as BWX, what would happen?