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Harold Bradley and Robert Litan of the Kauffman Foundation raised some valid concerns about ETFs in their testimony to the US Senate Banking Committee last week. But other criticisms are off the mark.

What are the key points in their report?

ETFs are preventing companies from going public

To me this is the authors’ weakest argument. Bradley and Litan state that over the last 12 years the number of exchange-traded stocks in the US has fallen from 6,200 to 4,300, while the number of ETFs has risen from 95 to over 1,100.

“ETFs are undermining the fundamental role of equities markets in pricing securities to ensure that capital is efficiently allocated to growing businesses,” they conclude.

But this ignores the chilling effect on the US IPO business of the compliance costs introduced by the 2002 Sarbanes Oxley Act, as well as the growing recognition by corporate treasurers worldwide that US banks’ underwriting fees are a rip-off. There are other places in the world to list, in other words.

Twelve years back—1999—also takes us back to the peak of the internet bubble, when hundreds of companies with non-existent earnings and zero prospects did get listed. Remember eToys, webvan and pets.com? A drop in the number of listed stocks from those days and a tightening up of underwriting rules is hardly a loss to the investing public, in my opinion.

0/10 for Kauffman on this one.

ETFs cause high co-movement of index stocks

In their testimony, Bradley and Litan reproduce a chart from Ned Davis Research, which shows that the median two-month correlation between S&P 500 index stocks and the index itself has risen to 0.86, a four-decade high.

To me it’s common sense that the more investors buy and sell equities via index trackers like ETFs and futures, the higher you’d expect internal index correlations to be. And since ETFs have been growing in importance, the greater you’d expect their impact on index stocks’ co-movements to be.

Researchers at JP Morgan came to similar conclusions last year, arguing that high-frequency trading is also playing a role in boosting internal index correlations.

There’s nothing forcing investors, by the way, to purchase those index trackers where such herd effects are most prominent. You don’t have to buy the S&P 500—you could easily choose an index put together in different ways and featuring different stocks. Arguably, avoiding “overowned” indices should be near the top of a list of any investor’s priorities.

Nor are herd effects any less pronounced among active investment managers, all of whom tend to track and try to outperform the same benchmarks.

7/10 for pointing out the existence of such “tight coupling” and asking questions about its significance.

ETFs make certain areas of the market appear more liquid than they really are

I agree with Bradley and Litan’s view that certain ETFs “may have outgrown the market maker’s ability to buy component securities” and that “perceived easy to trade ETFs cannot ever make hard to trade stocks easier to buy or sell”.

That’s relevant not just to the smaller cap stocks they highlight in their testimony, but to other relatively illiquid areas of the market: large sectors of the bond markets and emerging market equities, for example.

And I believe Bradley and Litan are correct to argue that sponsors should be forced to describe how high levels of short interest in an ETF are aligned with the liquidity of ETF constituents. How long, in other words, would it take to cover a short via the ETF creation process, given limited trading volumes in the underlying stocks?

7/10, again, for this section.

ETF sponsors should pay companies for index inclusion

I simply don’t understand this suggestion, made by Robert Litan in an interview on our site. If you list your company’s shares on a stock exchange, you’re allowing third parties to buy and sell them at will.

If you don’t want the volatility that goes with a public listing, you’re under no obligation to allow your shares to be traded on an exchange.

If someone wants to put together a portfolio that includes your company’s shares, whether on the basis of company size, capitalisation, business activity, valuation, share price volatility, that’s up to them.

There are undoubtedly economic incentives that go hand in hand with inclusion in some of the more popular indices, given the weight of passive money following them. If certain index variants become inefficient or too popular from an investment perspective, other indices will emerge to compete with them.

I can see no reason for payments of this type. Am I missing something?

2/10 for this proposal.

ETFs deserve tighter circuit breakers than individual stocks

I agree with this argument in principle, since ETFs, by virtue of being diversified, are supposed to be less volatile than individual stocks. Calibrating ETF-specific circuit breaker levels will be hard, though.

My colleague Dave Nadig points out that it’s important not to leave loopholes where trading in the ETF (for example) is stopped, but that in most of the underlying stocks can carry on. On the other hand one could argue that the reverse currently applies: if ETF and single stock circuit breaker limits are set at the same level, it's likely that in a market decline trading in many index stocks will be halted before the ETF hits its limit.

5/10 for this suggestion: good idea but hard to implement in practice.

ETFs need a new regulatory framework

It’s hard to argue with this one either, given that most US ETFs are defined by blanket exemptions from a 1940 law designed for mutual funds.

Approving ETF issuance via so-called exemptive relief allows for the unsatisfactory state of affairs we’ve seen in the US over the last couple of years, where new derivatives-based funds can’t come to market but the ones listed earlier are left untouched.

Such a review of ETFs is now ongoing, anyway, in the US, while an equivalent exercise is taking place in Europe under the European Securities and Markets Authority.

ETF regulation cannot be looked at independently from that of derivatives, market making, and secured finance, to name just three related areas. But there’s an obvious need for the ETF rules to be re-examined.

8/10 by calling for a broad inquiry into the subject.

Market maker exemptions should be removed and settlement practices improved

I’m with Bradley’s and Litan’s March 2011 co-author, Fred Sommers, on this one. Allowing traders leeway to settle ETF trades late on the basis of the exemptions currently allowed to market makers under the US Securities and Exchange Commission’s Regulation SHO introduces unnecessary systemic risks.

Sommers has done a dogged job asking pointed questions about who’s benefiting from delayed settlements, whether there are new risks in the system, focused at custodial banks, and whether lax settlement practices might combine with high levels of short interest in certain ETFs to create liquidity problems.

In Europe, ETF settlement practices appear even more chaotic, suggesting the need for regulatory action this side of the Atlantic, too.

9/10 to the Kauffman authors for requesting improved practices in this area.

For the webinar we ran last week on the subject of regulation, I put together a slide listing the ETF-related warnings that have been issued by an alphabet soup of international supervisory bodies since 2009. In repeated public statements, regulators have reiterated their concerns over ETFs’ structure, their collateral and counterparty risks, possible contagion effects from ETFs to the broader financial market, short selling, leverage, and fallible liquidity. Ironically, though, given what’s just happened at UBS, not one warning mentioned the issue of clearing and settlement as a potential concern.

Although we still don’t know the full details of the fraud at the Swiss bank, and my colleague Kumaara Velan reminded us yesterday of the danger of jumping to conclusions on the basis of insufficient evidence, multiple reports now point to loopholes in the way ETF trades are reported, cleared and settled in Europe as the key to unlocking the latest rogue trading scandal. We tried to fill in some of the details ourselves a couple of days ago.

For many observers, it’s still hard to understand how UBS could have traded in ETFs using settlement dates that extended weeks into the future—as they apparently did—without the requisite post-trade checks occurring.

“When I found out banks were not confirming forward ETF [trades] until settlement date, I was pretty surprised,” Conrad Voldstad, chief executive of ISDA, the trade association for the world's over-the-counter (“OTC”) derivatives market, said yesterday, according to Reuters.

Many criticisms of European ETF market transparency have focused on the fact that a large proportion of trades is conducted OTC. However, the simple fact that transactions may be conducted away from a public exchange doesn't relieve the counterparties involved from the obligation to record, administer and settle them properly, Voldstad is implying.

“Trillions of dollars trade every day in the OTC market…these trades are verified by back and middle office personnel, generally within 24 hours. For the operations department [at UBS] not to have called or e-mailed the fictitious counterparties to verify these multi-billion dollar trades does not make sense. Given the magnitude of the losses on the real trades, the fake trades must have had a multi-billion dollar gain, creating a large counterparty credit risk which should have been elevated to the credit risk department for vetting, margin calls or other action," one industry insider commented yesterday on a Wall Street Journal article, making exactly the same point as Voldstad.

Details of how exactly the UBS fraud escaped the attention of the bank’s supervisors, and why trades were apparently not documented properly, will emerge in due course. However, according to many press reports over recent days, several involving apparent leaks from people inside UBS, there’s been a widespread practice in Europe of failing to confirm immediately those ETF trades that are conducted on a bilateral basis. Two days ago IndexUniverse.eu asked two European investment banks with large “delta-one” desks—Deutsche Bank and Credit Suisse—whether they send out confirmations as a matter of course following trades in ETFs. Neither bank has yet responded. I should add that there's no suggestion that either institution was involved in the UBS scandal.

On the basis of the available evidence, it appears that the UBS rogue trader combined two key bits of knowledge: awareness of the fairly liberal trade settlement rules in London (where there’s little sanction for late settlement, a compulsory “buy-in” of unmatched trades only occurs 30 days after the intended settlement date, and so by itself the forward settlement of an ETF transaction might not have raised suspicions); and the knowledge that many counterparties wouldn’t automatically request trade confirmations.

Taken together, these two loopholes may have enabled the creation of fake transactions in UBS’s systems. Even if this was the immediate cause of the fraud, the bank’s risk controllers seem to have missed other warning signs. High gross trading positions, even if the trader reported his position as hedged, plus what were presumably significant cash outflows in margin as the result of losing futures positions, might together have been expected to flag that something was wrong. Perhaps this is how the fraud was eventually spotted.

But it’s now clear that there’s a specific ETF element to the story too.

When I wrote about the issue of settlement “fails” in ETFs over two months ago, I was prompted to do so after hearing a passing comment from a trader to the effect that timely settlement of exchange-traded fund trades in the UK market was the exception, rather than the norm.

Unlike some commentators, who claim to have had foreknowledge of an impending ETF-related scandal, I admit I had no idea that lax settlement practices in ETFs might be disguising a major fraud. I approached the subject more from the assumption that a hidden tax might be being imposed on people buying ETFs (for example, via higher bid-offer spreads than ought otherwise to occur) by those taking liberties with settlements procedures.

The subject of ETF settlements in Europe proved remarkably difficult to investigate. Traders were—with a couple of exceptions—unwilling even to discuss the subject. One leading ETF issuer told me it didn’t monitor secondary market settlement efficiency in its ETFs, only whether primary market trades settled on time. My enquiries to the three largest European stock exchanges, to regulators (BIS, the FSA, the Bank of England) and to clearing systems (EMCH, LCH.Clearnet), all met with similar responses: we don’t have any data on ETF settlement efficiency; or we have, but it’s confidential.

Only one organisation involved in clearing was prepared to help research the issue, but even then only on a non-attributable basis. As I reported in my article, the data that organisation put together pointed to a specific practice of delaying ETF settlements in London, by comparison with other European trading centres, although not quite to the extent that my trader contact had reported.

Compare the relative openness in the United States. There, the Depository Trust and Clearing Corporation (DTCC) reports regularly on settlement “fails” in both ETFs and equities. The New York Fed does so for Treasuries and other bonds. It was as a result of the public availability of this data that some researchers, like Basis Point Group’s Fred Sommers, started writing about the disturbing rise in failed securities settlements (not just in ETFs, by the way) in the first place.

I’ve read reports over the last couple of days to the effect that compulsory post-trade reporting for ETFs can’t be brought in until 2013 at the earliest, with the next MiFID review. The harmonisation of European securities settlement procedures, via the European Central Bank’s Target 2 Securities project, is even further away from implementation.

However, Europe's ETF market participants surely need to move as a matter of urgency to throw light on the murky world of OTC trading and on ETF settlement efficiency. All bilateral, off-exchange trades in ETFs must be reported so that the average investor can get a fair idea of what’s going on. Clearing houses and settlement systems—and I realise that there are many of them in Europe—should publish data on the efficiency of the post-trade processes in ETFs just as their counterparts do in the US market, and in the same way as Europe’s stock exchanges regularly publish data on bid-offer spreads and turnover. Such data should be published both for individual funds and for ETF market makers, so we can see where potential problems lie.

Without such steps, public confidence in the ETF market, which must already be at a low ebb after the UBS scandal, is likely to wane further. John Bogle, founder of Vanguard and the father of index-based investing, repeated his long-standing criticisms of ETFs in a CNBC interview on Monday, calling them “a bastardised version of the index fund” and adding that “only an idiot would want to trade indices all day in real time”. The onus is on the ETF industry to prove him wrong.

What if, immediately after Japan’s tsunami and the subsequent Fukushima meltdown, we had decided to stop and decommission all outstanding nuclear plants around the world?

With the exception of extreme environmentalists, most people would probably prefer to avoid such a drastic, knee-jerk reaction.

It is not that nuclear plants, per se, have become any more dangerous after the tsunami. It’s the lack of suitable risk management procedures and the decision to build the Fukushima reactor at close proximity to the sea that should be questioned.

The case of the alleged rogue ETF trader, Kweku Adoboli, at UBS is not very different. Why?

In its press statement on 18 September 2011, UBS said:

“The loss resulted from unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months. The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio. However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions, allegedly executed by the trader. These fictitious trades concealed the fact that the index futures trades violated UBS's risk limits.”

The reference to the use of fictitious positions employed to conceal true economic exposure suggests an uncanny resemblance between the UBS case and the activities of Jérome Kerviel, the trader at Société Générale, who was jailed last year after incurring €5 billion of losses via unauthorised trading in 2008.

To understand the thin line of separation between so-called “rogue trading” and legitimate market-making activities that are the essential drivers of financial markets, some explanation is needed.

In addition to pocketing revenues from setting a small spread between the bid and ask prices for a security, market makers can also look to index arbitrage as a source of income. Such index-based trading, conducted on a so-called delta-one desk, was part of both Adoboli’s and Kerviel’s responsibilities. A delta-one trader continuously monitors the market to arbitrage away price differentials between baskets of stocks and related derivatives, such as stock index futures, swaps and ETFs. A characteristic feature of a trader working in this role as an arbitrageur is that both long and short positons are held, one offsetting the other. So, when the market moves in either way, gains made in one of the positions will be offset by the other exposure almost completely, leaving only small arbitrage gains to be extracted.

Kerviel succeeded in fooling risk managers at Société Générale in 2008 by building up huge long exposures to major European stock indexes, and, rather than offsetting them with opposite trades, registering dummy transactions on the bank’s computer system. Because one side of the hedging transactions was non-existent, namely the short position that would have gained should the market plummet, Kerviel had deviated from the arbitraging function of a trader to one of a speculator. He made unidirectional bets on the market. And, it’s worth reiterating, he did not need ETFs to accomplish this.

From UBS’s description of “fictitious, forward-settling, cash ETF” positions used to hide risk exposures, it’s clear that Adoboli claimed the economic benefit of having sold (short) the ETFs without physically delivering them to counterparties, making use of lengthy settlement periods. Bilaterally negotiated trade agreements are quite common in the over-the-counter markets where many European ETFs are traded, even if setting long settlement periods by design is not.

But immediate reactions to the UBS scandal that incriminate ETFs without investigating the full story are misleading and unhelpful. Calling ETFs parasites is not unlike claiming that nuclear power plants, in and of themselves, will end the existence of humankind. There is a reason why we have resorted to nuclear power. The benefits should outweigh the dangers for any pursuit to be rational.

It may well be that Adoboli exploited a loophole (see this IndexUniverse.eu article) in the way ETFs are structured, traded, and settled in order to make his speculative one-sided bet on European markets. But the pressing problem here is surely much bigger than ETFs and involves poor risk management procedures that need to be fixed and, more broadly, the misaligned incentive structures inherent in banks. It is very difficult to argue that such rogue trading would not have occurred if ETFs did not exist. Look at Kerviel.

Conceptually, the alleged UBS scandal is no different from Kerviel’s. But the scandal’s association with ETFs has spooked many. We should certainly try and root out the problem, but let’s be careful before drawing incorrect conclusions from inadequate evidence.

Facts are still scarce when it comes to yesterday’s reported loss of US$2 billion from the “delta-one” desk at UBS. That hasn't stopped commentators jumping to conclusions, particularly when the three letters "ETF" are involved. But what do we really know?

Initial evidence points at an unauthorised FX transaction

Several news outlets (see, for example, Bloomberg) have pointed out that Kweku Adoboli, the UBS trader arrested yesterday by City of London police, changed his Facebook status to “need a miracle” on September 6. Earlier that very same day, the Euro/Swiss franc rate had jumped by nearly 10% in a matter of minutes.

Was this a coincidence? It’s hard to think of many other market moves in the last two weeks that could have triggered such a huge loss. And the period of a week or so between the actual loss being incurred and the trade’s exposure feels about right. UBS will almost certainly have been aware for several days that something was wrong before calling in the police.

Bank risk controls failed catastrophically

It seems obvious to state that internal risk controls failed at UBS, but even so it’s difficult to fathom how such a potential loss could go unnoticed. Blogger and former trader Kid Dynamite observes that it takes some doing for a single person to lose US$2 billion. If the EUR/CHF foreign exhange rate was indeed the immediate cause of the loss then, even if the bank entered and exited its positions at the worst possible time, it must have had a notional exposure to the currency of at least US$20 billion.

How might any trader be able to enter into such a risk position without anyone raising the alarm?

One common theme between Adoboli (who, I hasten to add, is still only a suspect) and earlier rogue traders (Leeson, Kerviel) is clear—all came from a background in settlements and therefore knew their way around their banks’ computer systems.

Bank incompetence has also historically played a key role in creating the environment for big trading losses. Nick Leeson, a back office employee at Barings, used an “error account” to book unauthorised trades and was not spotted by internal auditors for years. At Société Générale, Jérome Kerviel was promoted from a job in operations to the role of trading floor assistant, then reportedly given a small trading account of his own to buy and sell warrants on German shares. The bank’s primary objective in doing this was apparently to entice external investors by boosting the screen-based trading activity in the warrants. In hindsight, this was the opening the trader needed to incur huge risks later on. Kerviel also reportedly avoided the sack when earlier unauthorised trades that were uncovered turned out to have made money for the bank.

We’ve already seen a renewed bout of moralising about ETFs being to blame for the reported losses at UBS, with further suggestions that ETFs, like CDOs in 2007/08, risk bringing down the financial system.

“Delta-one” desks, like the one Adoboli worked on, trade in a whole list of index-related financial instruments, from futures to equity swaps, equity baskets (or programme trades) and ETFs. Those equity baskets are then often split into and traded as separate price and dividend components, creating more complex exposures (tax-driven dividend arbitrage is reportedly a key contributor to delta-one desks’ profitability in Europe). Delta-one desks also work closely with their parent banks’ hedge fund servicing units and with colleagues in equity-based secured financing. Fundamentally, though, delta-one is supposed to be a high-volume, low margin line of business for investment banks, with exposures being hedged and money being made on financing rates or things like a pick-up in effective dividend rates.

If an ETF-related trade was indeed responsible for the UBS loss then, first, a hedge was missing somewhere and, second, given the need for a very high notional exposure to incur a US$2 billion shortfall, very few ETFs could have fitted the bill. Only ETFs tracking the DAX or Euro Stoxx 50 have generated sufficient trading in the last couple of months to be even theoretically responsible for the UBS loss, one trader suggested to me this morning.

An unhedged over-the-counter equity derivatives trade, possibly also in conjunction with an FX position, is most likely to have caused the UBS loss, the trader surmised.

All this doesn’t mean there’s nothing to worry about when it comes to ETFs. Inconsistencies abound in the way exchange-traded funds are created, traded and settled in Europe. From widely differing product structures, multiple exchange listings, fragmented liquidity and inadequate trade reporting to a highly complex clearing and settlement infrastructure, there’s certainly a great deal of opacity in European ETFs. And such opacity creates plenty of opportunities for excess profits to be made by insiders.

If it does turn out that UBS’s losses were primarily as a result of someone exploiting these specific ETF market inefficiencies, then those painting exchange-traded funds as a rogue financial product will have a point. But, for the time being, other derivative instruments appear equally, if not more likely to have been culpable. In the absence of further evidence to support their claims, ETF critics are basically putting forward an argument similar to blaming futures and options, rather than poor internal controls, for the downfall of Barings in 1995.

Some standardisation of ETF product design, trading and settlement is long overdue, for sure. So is the requirement to trade derivatives on exchanges, using central counterparties. And so is the key reform that would realign incentives across the financial markets and act as a brake on excessive risk-taking.

The most obvious conclusion to be drawn from the UBS loss—one that several commentators have already made—is that taxpayers should no longer be bearing the risk of losses from such activities at banks. The existence of a government guarantee if things go wrong prevents poorly run firms from going out of business, as they should. If the latest rogue trading scandal hastens the removal of the “too big to fail” status from large financial institutions, then it will have done some good.

(Postscript, 17 September 2011. On the basis of the charges levelled yesterday against Adoboli and of further press reports, it appears that the UBS loss was caused by the trader apparently creating a series of fictitious hedges in the bank's internal accounting systems over up to three years. If correct, this case is highly reminiscent of the Kerviel fraud. Why UBS's control systems failed to pick up the fictitious trades remains to be seen. ETFs were apparently one of the instruments used by Adoboli, but it appears that it was the absence of offsetting hedges that caused UBS's losses. In summary, the main story here appears to be one of a serious management and internal audit failure at UBS.)

Over recent weeks banks in the UK have been furiously lobbying the government ahead of next Monday’s publication of a special report into the sector. It’s widely expected that the Independent Commission on Banking will recommend that UK-domiciled banks’ retail operations are “ring-fenced” from wholesale, investment banking activities, with only the retail part bearing any form of government support in future.

The banks, in aggregate, are against such a proposal, as it will cost them real cash. A June estimate by HSBC of the cost of ring-fencing for the largest four UK banks (primarily funding, liquidity and capital costs for their investment banking operations, if run as future stand-alone entities) was £10 billion. That’s before accounting for likely corporate deposit outflows, administrative costs or the impact of a probable slowing of the UK economy as a result of ring-fencing, all of which will have further knock-on effects for the banks, HSBC argued at the time.

But others may view these “costs” for the banks as the return of taxpayer money that had already been given to them for free. Andrew Haldane of the Bank of England estimated last year that banks had received an implicit government subsidy of £50 billion a year in 2007-2009. On this measure HSBC’s suggested ring-fencing costs look a bargain.

Given the heated debate that’s been going on over the ICB’s report even before it’s published, we can expect a lot more wrangling before the final rules on banking sector reform are decided. There have been repeated claims in the press over the last two weeks that the UK government wants to water down or delay the commission’s (leaked) recommendations.

There’s one big flaw, however, in the argument of those who suggest that banks can be trusted to look after their own affairs without structural change; that they won’t come calling again on the taxpayer for bailouts, in other words.

And that’s the abundant evidence that banks don’t trust each other. Three charts demonstrate this.

The Euribor-OIS spread, a measure of the willingness of banks in Europe to lend to each other on an unsecured basis, has risen to its highest level since 2009, as is shown in the following chart form CIMB Research.

For a larger view, please click on the image above.

The Markit iTraxx Europe Senior Financials index, a broad measure of the cost of default insurance for leading European financial names, has today hit an all time high of over 280 basis points. Banks are quoting ever higher rates to protect against their own counterparts’ failure to meet contractual obligations.

And even in the most liquid market in the world there are signs of trouble. Fred Sommers of Basis Point Group pointed out to me a couple of days ago that settlement fails in US Treasury bonds have shot up this month. This may indicate that banks are looking to hoard Treasuries which, after gold, are the most sought-after type of collateral for obtaining secured finance.

A chart of fails data from the DTCC website speaks for itself, and indicates a steady rise from a year ago.

Sommers also says that data published by the New York Federal Reserve Bank indicates a surprising and growing imbalance between the total fails to receive and the total fails to deliver reported by the 20 primary dealers in US government securities.

You might have thought that, among a single group of dealers, the total of securities not received for settlement should equal the total not delivered. Not so, apparently. This suggests, according to Sommers, either that there’s an accounting problem or (more likely) that custodians or financing banks are causing the discrepancy by using contractual settlement date accounting.

Under this practice, custodians credit (or debit) client accounts on the planned settlement date even if settlement hasn’t yet occurred. Although such account entries can be reversed later, the imbalances may be of concern in themselves to those monitoring the integrity of payments systems.

Regulators are attempting banking sector reforms at a tough time, for sure. It would also have been better if the credit bubble hadn’t been allowed to occur in the first place. But attempts by some governments to underwrite all banking sector liabilities have so far proven impossible—the debts are just too big. Some form of triage of the banking system into parts that can be saved, parts that go on life support and parts that die (i.e. default) is inevitable.

As banking sector risk measures climb higher, collateral and counterparty risk exposures in exchange-traded funds become more of a concern too. And market liquidity is getting tighter, something we’ve already written about on this site at length in recent weeks.

On a related note, next Thursday we’re holding a webinar to throw light on some of the concerns expressed by global regulators about the ETF market. I’ll be joined by Brian Kelliher of Dublin-based law firm Dillon Eustace, and by two investors who’ve been vocal on the subject of ETF risk exposures, Alan Miller of SCM Private and Gary Mairs of TCF. Please join us and share your views. You can sign up here.