This from the latest BullionBuzz on the possible collapse of EFT's.

Authors Andrew Bogan, Brendan Connor, Elizabeth C. Bogan write…

Since their invention in 1993, ETFs have gone from obscurity to making up more than half of all the daily trading volume on US stock exchanges. They also made up 70% of all the canceled trades during the Flash Crash of May 6, despite representing just 11% of listed securities in the US, suggesting that ETFs are poorly understood by both investors and regulators.

They are popular with two very different groups: retail and institutional investors looking for low cost and highly liquid vehicles with which to buy whole indices in a single trade; and hedge funds and other traders looking for a simple way to mitigate broad-market risks with a single trade. Being able to short an entire market index or a whole sector with one transaction, instead of many separate stock shorts, makes ETFs widely used as hedging vehicles by short-sellers, and many new ETFs are being designed specifically for marketing to short-sellers.

These seemingly opposite interests in ETFs make for a large and lucrative market not just for ETF operators, but also for the authorized participants – institutions that can create or redeem large blocks of new shares in an ETF, and the brokers that profit by trading ETF shares. The mechanics of short selling ETFs raises some serious concerns; for a start, owners of ETF shares often far outnumber the actual ownership of the underlying index equities by the ETF operator. Read more here: Bullion Buzz