The Bank of England’s (BoE) new Financial Policy Committee (FPC) has asked the Financial Services Authority (FSA) to monitor exchange-traded funds (ETFs) closely, The Wall Street Journal reports. FPC has advised regulators to monitor the risks associated with opaque funding structures, such as collateral swaps or similar transactions engaged by ETFs.
The funds are being used as a source of funding for some banks, through collateral swaps and similar transactions, adds IFA Online. The FPC is responsible for monitoring and dealing with potential asset bubbles and other risks to financial stability.
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