ETF debate trundles on.. the observation becomes the rule?

ETFs as a source of counter-balancing; reduced volatility, increased risk?

E.g. We know Commodity markets are exposed to irregular volatility due to the lack of depth and control of  relaitvely few bourses/ market-makers. They are more frequently subject to 'dislocation' the books say.

'Speculators do not drive commodity prices, says OECD' Increased investment in commodities is not linked to the price volatility of the physical commodities themselves, according to a report from the OECD. Not only did the research find index funds did not cause a price bubble in commodity futures, it showed a consistent association between increases in index fund positions and declining volatility.' IPE: Commodity ETFs

But does this mean that ETFs are also capping upside volatility, if so then what unforeseen consequences could this have (E.g. increased risk-taking, increased positions)?

The other danger is one of complacency, to assume the observation is the rule and will remain so. As yet we do not know what changes will occur in the market if the trading volume of ETFs escalates. JB