Understanding ETF ‘Flash Crashes’

Discussion in 'Wall St. News' started by freedinner, Aug 27, 2015.

  1. Sensible point.
     
    #11     Aug 27, 2015
  2. loyek590

    loyek590

    it wasn't that they were halted, they just hadn't opened yet and the etf didn't know how to price them. It probably happens every single morning, but the mispricing is so small no one bothers to notice. Maybe an etf shouldn't trade until all it's underlyings are open.
     
    #12     Aug 27, 2015
  3. 2rosy

    2rosy

    No one's mentioned the create/redeem process
    Which is how you price etfs. You don't need the entire constituents to arb but the underlyings were less liquid than the etf
     
    #13     Aug 28, 2015