Meanwhile, certain securities that resemble ETFs, notably exchange traded notes, were under the microscope after some traders argued that popular ETNs tracking the CBOE Volatility Index fueled additional volatility in the markets and exacerbated the sell-off.
Nevertheless, Powell did acknowledged that the Fed is working with other agencies to further investigate ETF’s potential risk to the markets as the investment tool is relatively new in financial system.
“But it’s something we’re talking to our fellow agencies [about], particularly the SEC, I think, would be best positioned to look at this. It’s a question we’re looking into,” Powell added.
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