A flurry of selling in municipal bond ETFs this week prompted one of the market’s largest exchange-traded fund sponsors to temporarily stop redeeming shares for cash. The move underscored how hard-pressed frantic sellers became in the heat of this week’s sell-off.

State Street Global Advisors, the asset management arm of State Street, told Wall Street trading desks Thursday that it would only accept so-called "in kind" redemptions for its suite of muni-bond ETFs, according to Tim Coyne, State Street's global head of SPDR ETF capital markets. A spokeswoman said State Street resumed allowing dealers to its muni ETF shares for cash on Friday.