European regulators are seeking to follow in the footsteps of their U.S. counterparts and seeking methods to ease restrictions on the ability of fund managers to invest in exchange traded funds (ETFs).

Fund managers who want to invest in ETFs are constantly restricted by rules which either stop them from outsourcing the management of the funds, or developing webs of cross-holdings, a factor in the 1929 Wall Street crash, reports Steve Johnson for Financial Times.

Here in the United States, a mutual fund is required to seek permission if it seeks to invest more than 5% of its assets in another fund or more than 10% of its assets in all other funds. The Securities and Exchange Commission (SEC) is considering granting mutual funds carte blanche to invest in ETFs, so long as certain conditions are met.

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