AI-powered
podcast player
Listen to all your favourite podcasts with AI-powered features
2min snip
David Nadig: The Complexities of Modern Markets - [Making Markets, EP.43]
Making Markets
Beware the Hidden Risks in Passive Markets
The increasing passiveness of markets presents significant challenges, notably the susceptibility to large flows that can dramatically alter market conditions. The reliance on the derivatives market complicates the trading dynamics of underlying indexes, creating a lack of clarity about when and where market disruptions may occur. Often, the origins of such disruptions will be hidden from view, potentially stemming from unexpected sources within the system, leading to widespread confusion as market participants react. While passive investment strategies distort market behaviors, acknowledging this reality does not necessarily lead to immediate changes in market structure. Awareness of passive flows, particularly in nuanced trades like the carry trade, offers vital insights for analysis. Furthermore, the returns from investments may not solely benefit shareholders, as intermediaries within the ETF complex also draw profits from these transactions.
00:00
Transcript
Episode notes
Get the Snipd
podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered
Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any
moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share
& Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered
podcast player
Listen to all your favourite podcasts with AI-powered features
Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode