BlackRock says ETPs and ETFs perform differently and need regulation
Hong Kong — BlackRock, the world’s biggest asset manager, has called for regulation that would clearly spell out the risks associated with inverse and leveraged exchange-traded products (ETPs) after the collapse of two notes linked to volatility. Inverse and leveraged ETPs don’t perform like exchange-traded funds (ETFs) under stress and regulators should acknowledge the difference, BlackRock said in a statement on Tuesday. BlackRock "strongly supports" a classification system that would label these ETPs differently than "plain vanilla" ETFs, it said. BlackRock, which manages more than $6-trillion, is also the biggest provider of ETFs. The firm, for years, has been calling for better regulation of leveraged products, with CEO Laurence Fink saying in 2014 that such offerings have a structural problem that has the potential to "blow up" the industry. Two inverse ETPs tied to the Cboe Volatility Index tumbled after volatility spiked, prompting a trading halt. The two products were short...
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