When regulatory agencies put limits on trading securities that ETFs track, the entire pricing mechanism is thrown for a loop.Proposed regulations affecting futures-based commodity and leveraged ETFs could change the industry, and Goldman Sachs ( GS) has been the first to speak out. "Consumers need hedging. Producers need hedging. And you need financial intermediaries to help do that," Goldman's Chief Financial Official David Viniar noted on the recent earnings conference call. While regulations may not be imminent for the markets as a whole, ETF investors should understand the ways in which regulatory action has already affected ETF trading. Every ETF has an underlying net asset value (NAV) that the fund is supposed to track. The process of ETF creation helps keep share price in line with NAV during the trading day. ETF market makers create units of shares, usually in 50,000 or 100,000 share lots, to meet customer demand for funds. When investors buy shares from a designated market maker (a sort of ETF specialist), the market maker will in turn hedge his or her position to minimize risk.