Leverage and Inverse ETFs Under Siege

It is disappointing to see all of the restrictions place on leverage and inverse ETFs.  These exact same strategies have been available in a mutual fund structure for 15 years.  It seems what was a good opportunity by FINRA to remind member firms of the risks associated with these products has turned into something I don’t think anyone in the industry would have imagined.

It seems a slippery slope for broker-dealers, what if they FINRA reminds brokers of the risks of penny stocks, or micro caps, small caps, or possibly emerging market securities.  And now that some broker-dealer have set a precedence on restricting a security deemed “too risky” does that put an obligation on the broker-dealer to do this across the board for all securities??

Education is usually the best solution to help manage misconceptions.


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