Christopher R Meehan Comment On Regulatory Notice 22-08
Christopher R Meehan
Accountant
To FINRA, It has come to my attention through my broker that this notice may lead to a restricting of many types of investments that I have available to me. While some of the recommended requirements such as a cooling-off period and an increase in information that a client must see could benefit retail investors. Other requirements such as a net worth requirement are troubling, to say the least. As does the catch-all term "complex products". Many people do not even understand the transaction side of the normal equities market (liquidity risk etc), in theory, one could label this as a complex market as well. At the very least the vast majority of these "complex products" should be more easily accessible than the options/ futures market. These markets come with extra requirements not just because of their complexity but because of the potential loss of more than the invested capital. With many leveraged ETF-type products this is not the case. My maximum loss is only the amount that I put in, nothing more. If I am restricted from leveraged ETF I would be forced to use the options market for my investment strategy. An ill-advised FINRA rule could push many people into even more risker investments. Unless FINRA also increases the requirements for options trading which doesn't seem to be the case in this notice. The mission of FINRA is to protect investors by making sure that brokers offer investments that are truthful and suitable and that offer complete disclosure of all risks. Increased disclosure of investments and making sure that information is truthful and accurate is always a benefit to the investor. Limiting investment access because of "suitability" is something you must be careful with. As well as any possible regulations to test investor knowledge that creates an undue hurdle on the investor. As I alluded to before, the average investor who buys and sells normal blue-chip securities most likely has large gaps in their financial knowledge and one could easily devise a test that would cause most investors to fail. This would be completely against the mission of FINRA. A request I would have for FINRA would be to go above working with the brokers but to work with all stakeholders. Especially the ones who created these "complex products". Proshares (https://www.proshares.com) and Direxion (https://www.direxion.com). Any proposed rule must be discussed with them so they can continue to offer these products to investors whose investment strategies may depend on being able to access these funds. If any of them are no longer able to offer their products because of undue regulation I would place the blame on FINRA. Besides the potential legal ramifications, this would hurt the people who FINRA is supposed to protect. Thank you for taking the time to read my comment. I am an investor in funds created by ProShares. If they are worried about what this notice could lead to I am too. As an investor, I should be able to choose the investments that are right for me based on my own strategies, and I should not have to go through a special process or have my choices limited because of my net worth. I expect FINRA to preserve the continuity of my access to these funds.
Christopher R Meehan Comment On Regulatory Notice 22-08
To FINRA, It has come to my attention through my broker that this notice may lead to a restricting of many types of investments that I have available to me. While some of the recommended requirements such as a cooling-off period and an increase in information that a client must see could benefit retail investors. Other requirements such as a net worth requirement are troubling, to say the least. As does the catch-all term "complex products". Many people do not even understand the transaction side of the normal equities market (liquidity risk etc), in theory, one could label this as a complex market as well. At the very least the vast majority of these "complex products" should be more easily accessible than the options/ futures market. These markets come with extra requirements not just because of their complexity but because of the potential loss of more than the invested capital. With many leveraged ETF-type products this is not the case. My maximum loss is only the amount that I put in, nothing more. If I am restricted from leveraged ETF I would be forced to use the options market for my investment strategy. An ill-advised FINRA rule could push many people into even more risker investments. Unless FINRA also increases the requirements for options trading which doesn't seem to be the case in this notice. The mission of FINRA is to protect investors by making sure that brokers offer investments that are truthful and suitable and that offer complete disclosure of all risks. Increased disclosure of investments and making sure that information is truthful and accurate is always a benefit to the investor. Limiting investment access because of "suitability" is something you must be careful with. As well as any possible regulations to test investor knowledge that creates an undue hurdle on the investor. As I alluded to before, the average investor who buys and sells normal blue-chip securities most likely has large gaps in their financial knowledge and one could easily devise a test that would cause most investors to fail. This would be completely against the mission of FINRA. A request I would have for FINRA would be to go above working with the brokers but to work with all stakeholders. Especially the ones who created these "complex products". Proshares (https://www.proshares.com) and Direxion (https://www.direxion.com). Any proposed rule must be discussed with them so they can continue to offer these products to investors whose investment strategies may depend on being able to access these funds. If any of them are no longer able to offer their products because of undue regulation I would place the blame on FINRA. Besides the potential legal ramifications, this would hurt the people who FINRA is supposed to protect. Thank you for taking the time to read my comment. I am an investor in funds created by ProShares. If they are worried about what this notice could lead to I am too. As an investor, I should be able to choose the investments that are right for me based on my own strategies, and I should not have to go through a special process or have my choices limited because of my net worth. I expect FINRA to preserve the continuity of my access to these funds.