The Securities and Exchange Commission has expanded an inquiry into exchange traded funds and is looking at ETF trading and settlement fails, Reuters reports.
“Prompted by a delay in a big trade at a popular ETF, the SEC is taking a closer look at a possible connection between high-frequency traders and hedge funds jumping in and out of ETFs, and instances where ETF trades fail to settle on time,” according to the report, which sourced a person familiar with the matter.
The regulator’s probe is part of a broader examination of ETFs that initially focused focused on leveraged funds, the article said.
Regulators may be looking at ETFs with high levels of short interest.