In my recent pieces on whether and ETF can collapse,if there is one thing I heard from the ETF industry and anybody but everybody who disagreed with me it was this (and I’m paraphrasing because this is a g-rated website, John Carney notwithstanding): “Greenberg, you’re wrong: ETFs are not derivatives.”
I now give you this line from the SEC’s Flash Crash report:
“The E-Mini and SPY are the two most active stock index instruments traded in the electronic futures and equity markets. Both are derivative products designed to track stocks in the S&P 500 Index, which in turn represents approximately 75% of the market capitalization of U.S.-listed equities. In order to compare trading and liquidity dynamics in these two products it is important to note their differences so that appropriate side-by-side adjustments can be made.”
That’s a Miracle on 34th Street moment. If the United States Securities and Exchange Commission recognizes ETFs as derivatives, then so do I.