ETF Liquidity Risk a Concern for Regulators, Wilkins Says
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The financial system’s global regulatory body is examining whether exchange-traded funds pose a risk to market stability when interest rates start to rise, according to the Bank of Canada’s representative to the group.
“There’s been investments and positions taken that may not have the liquidity there that people expect, especially as interest rates start to normalize,” Carolyn Wilkins, senior deputy governor at Canada’s central bank and its representative at the Financial Stability Board, said in an interview at Bloomberg’s Toronto office today. “So the liquidity illusion, if you want to put it that way, is something that we’re worried about.”