Lyxor, the Paris-based asset manager, has spoken out for the first time about its decision to impose a block on investors withdrawing money from its Greek exchange traded fund.
Lyxor imposed the block after the closure of the Athens stock exchange last Monday, with the crisis in Greece continuing to escalate.
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The move fueled concern among critics, who fear ETF trading is vulnerable to disruption when market conditions become volatile.
Arnaud Llinas, the global head of Lyxor's ETF and indexing businesses, said there was "no choice" but to suspend trading of the €231 million Greek ETF.
"There is no market in Greece. Our priority is to protect the holders of the ETF," said Mr Llinas. He added there was a risk the price of the ETF could have been manipulated in the absence of activity in the underlying market.
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Lyxor's decision has come under particular scrutiny because Global X, a US manager, has allowed investors to continue to trade its $322 million Greek ETF.
Mr Llinas insisted there had been no negative reaction from investors.
A senior ETF trader, who did not wish to be named, said he sympathized with Lyxor. "If the Athens market is closed, then who knows what the true value of a Greek ETF should be?," he said.
The Global X Greece ETF continues to trade in New York. Bruno del Ama, chief executive officer of Global X, said: "The situation in Greece remains fluid and we continue to monitor ongoing developments."
Observers have drawn a parallel with an Egyptian ETF that continued to trade in New York during a two-month suspension of the Cairo stock exchange in 2011 following the revolution that swept Hosni Mubarak, the former president, from power.
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Some traders argued the Egyptian ETF played an important price-discovery role while the Cairo stock market was closed.
Mr Llinas rejected the suggestion it should have allowed trading of its Greek ETF to continue.
"It is not our policy for the Lyxor Greek ETF to act as a standalone price-discovery vehicle. The job of an ETF is to track an index," he said.