The majority of advisers believe market structure issues were the primary reason for the
The solution: exchange-traded funds, which advisers see as the safest investments for staying afloat in a volatile market. Bonds and mutual funds were also high on the list.
According to the survey, which was commissioned by BlackRock ETF subsidiary,
Interestingly, most advisers’ surveyed said their accounts were not impacted by market volatility on May 6th. About a quarter of advisers were impacted when a stop-loss order was triggered at a significantly reduced value.
In terms of solutions, the single-stock circuit breaker rule proposed by the SEC is one of the primary solutions advisers endorse to address the causes of the Flash Crash. They also endorse clearer inter-market routing guidelines to fix market structure problems, placing trading audits and expanding the role of the lead market maker.
“The findings of the financial adviser survey around May 6th are noteworthy because they indicate that advisers believe that market structure issues were at the root of the ‘Flash Crash’ and that the initial recommendations made by regulators to fix structural market problems are a step in the right direction,” said Rob Stone, Ph.D., Executive Vice President at Market Strategies International.
“In addition, advisers’ market sentiment leans towards the view of continued or increased market volatility and, despite the Flash Crash, advisers state that they will use ETFs most often in uncertain markets," Stone said.
