Exchange-traded funds and high-frequency trading may pose systemic threats to markets and warrant bans, said Consob Chairman Giuseppe Vegas.
“Legislators and authorities need to ask themselves if certain types of innovation are good or bad for savers,” Vegas said in a speech at the Italian securities market regulator’s annual meeting in Milan today. Legislators shouldn’t hold back from “simply banning the spreading of dangerous practices and products,” he said.
Vegas, who took over as Consob chairman last year, said high-frequency trades need more rules to prevent market distortions and to control volatility. ETFs, which banks have used to raise funds as an alternative to deposits, should become more transparent, he said.
Consob has been a proponent of banning so-called naked credit-default swaps and backed the European Union’s move to halt the contracts on sovereign debt.
“Financial innovation can be positive but legislators and authorities must avoid that it becomes a mechanism that wipes out families’ savings,” he said.