CFTC To Investigate ‘Artificial Inflation’ Of ETFs

cftc“A leading US regulatory body is set to probe the role of exchange-traded funds (ETFs) in the suspected artificial inflation of oil, natural gas and gold prices, the Wall Street Journal reported on Saturday (22nd August),” Platinum Today Reports.

“Figures from the National Stock Exchange suggest that they held a huge $59.3 billion in assets as of July 2009, with about $22.1 billion being ploughed into them already this year. However, the Commodity Futures Trading Commission (CFTC) is now set to explore activity in ETFs, which effectively involve making one-way bets, generally on particular prices increasing. Although critics are suggesting that the move will eventually eliminate small investors and make the funds the preserve of the top financial companies, the CFTC has rejected those claims,” Platinum Today Reports.

“The commission has never said ‘You aren’t tall enough to ride’,” said Commissioner Bart Chilton in an email quoted by the news provider. “I don’t want to limit liquidity, but above all else, I want to ensure that prices for consumers are fair and that there is no manipulation – intentional or otherwise.” Nevertheless, placing restrictions on the size of ETFs will see investors’ expenses increased, largely because this will require legal and operational costs to be split between fewer shares,” Platinum Today Reports.

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