NYSE Euronext and the Securities Industry and Financial Markets Association are backing the ETF exemption for banks.
The banks’ trading activities are “essential to the liquidity of that market,” NYSE Euronext said in the article.
Meanwhile, Volcker has warned that banks may use complex products to hide speculative risk, while critics have identified ETFs as a potential source of systemic risk, the FT said.
“Some people have talked about ETFs as the next time bomb,” said Joseph Saluzzi of Themis Trading in the story. “It’s a field that should certainly be regulated heavily, especially with so many retail traders participating.”