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ETF market concentration may lead to systemic risk, ESRB report says

( June 17, 2019, 14:34 GMT | Official Statement) -- MLex Summary: The high degree of concentration in the market for exchange traded funds — which is dominated by Blackrock, Vanguard and State Street — may end up posing a financial stability risk, the EU's watchdog for economic risks said in a report released today. "Operational risk can in principle have systemic consequences," the European Systematic Risk Board report said. A technical failure or high-profile case of financial misconduct at a single major provider could prompt investors to flee the entire segment, triggering "widespread fire sales" and large price drops, it said. The EU watchdog also mentions how a large number of investors taking the same position can result in contagion.Statement follows. Report attached....

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