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To: TFF who wrote (10905)	8/7/2003 1:02:18 PM
From: TFF	Respond to of 12617

More hedge funds using ETFs to sell stocks - study Wed August 6, 2003 03:07 PM ET NEW YORK, Aug 6 (Reuters) - More and more hedge funds are using the fast-growing exchange-traded funds as a way of easily short-selling the stock market or various sectors, a research report said this week. According to Greenwich Associates, a research firm focusing on trends in the financial markets, use of exchange-traded funds, or ETFs, like Spiders and the QQQ has more than doubled in the past year, primarily because hedge funds increasingly use them as a way to quickly short sell the market or certain sectors. Exchange-traded funds are derivative shares that mimic baskets of stocks for an index or a sector of an index, like the popular Spiders for the S&P 500 SPY.A or the QQQ QQQ for the Nasdaq 100. According to the survey, their share of the market jumped last year to 11 percent from 4 percent. ETFs have become very popular among hedge funds because they can be short-sold even when the last move was down. With individual cash shares are trader must wait for the price to stabilize or tick up before executing a short-sale. Greenwich found ETFs are also increasingly used in Europe. In its annual snapshot of the equity derivatives market, Greenwich also found money managers are relying much less on derivative specialists to help them use the financial instruments. The amount of business funds do through derivative specialists has fallen to just 20 percent this year from 60 percent two years ago, the report said. Trading volume in equity derivatives expanded by 23 percent to $7.4 billion this year, the report said. Seventy-seven percent of the market is made up of exchange-traded futures and options. In terms of size, the equity derivatives market is much smaller than its counterparts for interest rates and currencies. According to the International Swaps and Derivatives Association, through June 2002 total outstanding contracts for equity derivatives totaled just $2.4 trillion, compared with $99.8 trillion for interest rate and currency derivatives.