Summary
It seems clear from my research, and from that of the regulatory bodies, that ETFs were not the cause of the flash crash. The day of the event and the following day were actually some of the highest-volume trading days for the products, at least until we encountered the volatility from the current ongoing financial crisis. This shows that investors’ faith may have been damaged in regard to the overall market, but their faith in the product continued, and they used the products in a time of market duress to manage portfolio volatility. The massive amounts of structural change that the markets are undergoing are not going to be without events that are unintended consequences, but it seems clear that ETFs will be the tools that will help ...
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