<ul>
<li>New BIS analysis of the <a href="https://www.bis.org/statistics/rpfx22.htm"><span class="firstword">2022</span> Triennial Central Bank Survey</a> shows shifts in trading patterns and market structure in foreign exchange and over-the-counter interest rate derivatives markets, identifying risks deserving attention.</li>
<li>Foreign exchange swap positions point to over $80 trillion of hidden US dollar debt, reported off-balance sheet. </li>
<li>The volume of daily foreign exchange turnover subject to settlement risk remains stubbornly high despite mechanisms to mitigate such risks. </li>
</ul>
Research on baskets shows they help absorb shocks in turmoil.
Sam Potter | Mar 01, 2021
(Bloomberg) Critics of the passive-investing boom in bonds warn about the risks stemming from the mismatch between highly tradable ETFs and the illiquid securities they hold.
Turns out this very discrepancy might help stabilize the market, according to the Bank of International Settlements.
The latest quarterly report from the Basel-based central bank for central banks explores the mechanism that regulates the price differences between fixed income exchange-traded funds and the bonds they own.
The surprising conclusion: Yes, the two values can be wildly different, but that disconnect is a key shock absorber for the market.