Why New Growth Companies Aren’t Going Public
New Report Outlines Causes of Market Distortions Choking Recovery and Preventing New Growth Companies from Going Public
Derivatives known as "ETFs" are the true culprits in artificially setting stock prices and posing threats to market stability
A form of indexed securities known as "exchange traded funds"--or ETFs--are distorting the markets to such an extent that they are threatening the growth of new companies by effectively curtailing their access to capital, according to a provocative new report issued today by Harold Bradley and Robert Litan of the Kauffman Foundation. Moreover, it is these derivatives and not the phenomenon known as high-frequency trading (HFT)--commonly critiqued as contributing to the "flash crash" of May 6, 2010--that pose serious threats to market stability in the future.
Read the press release and paper, which includes recommendations for the SEC to mitigate ETF dangers.