Andrew Bailey Warns G20 That Retail Investors Buying Leveraged ETFs Could Worsen Market Sell-Offs

Andrew Bailey (right) warned finance leaders of multiple risks, including AI cyber threats, and said efforts are underway to address them. (Credit: Wikimedia Commons)

Andrew Bailey has warned the world's major economies that rising leverage and concentrated investment strategies could amplify a future market fall. Bailey is Governor of the Bank of England and Chair of the Financial Stability Board (FSB). The warning came in a letter dated 28 August and published by the FSB on 31 August, ahead of the G20 finance ministers' and central bank governors' meetings in Asheville, North Carolina, on 31 August and 1 September.

His concern includes the growing use of leveraged exchange-traded funds (ETFs) and momentum-driven strategies, including among retail investors. These funds use financial instruments to seek a multiple of an underlying index's or share's daily return, magnifying both gains and losses.