I am strongly opposed any additional regulations to leveraged and inverse securities. All investments have an element of risk; by requiring a list of pre-requisites to trading these securities, you decrease the investor base with access which could add to increased volatility as well as making the acquisition and disposition of said securities much more difficult. Additionally, further regulations would limit the pool of investors by a yet undetermined threshold, endangering currently held positions and carefully crafted investment plans. Leveraged securities allow all investors to participate in the free market system, rather than a select few. The purchasing of options to create a similar leveraged effect is at least as risky, arguably more risk-filled and complicated, and yet those have no intellectual barriers to entry. I ask you to consider not only the direct effects of these regulations, but also the broader effects that such regulations will have on the rest of the market. The role of regulators should be to monitor companies to see if they are conforming to market rules, not to regulate whether investors are qualified to engage in free-market activity. There are sufficient warnings about the risks involved in trading leveraged and inverse securities; if certain investors do not take the time to research their investments or to ignore the warnings currently in place, then that is an individual decision, not a community-wide issue. Adding more warnings as to the risks of investing in leveraged products is entirely sufficient; but restricting the pool of investors to only those that meet a certain threshold is contrary to a free-market system and could have wide-ranging repercussions that are unable to be seen beforehand. It has already been shown that investors can cause enormous volatility and incur massive losses with standard equities (e.g. meme stocks). Placing restrictions on investors of leveraged and inverse securities misplaces the causes of volatility and intellectual suitability to invest. I urge you to oppose adding restrictions and instead to seek ways to have risk information more easily and widely available, and to maintain a free-market system available to everyone and not just a select few. Thank you for your time.
Chun Pat Comment On Regulatory Notice 22-08
I am strongly opposed any additional regulations to leveraged and inverse securities. All investments have an element of risk; by requiring a list of pre-requisites to trading these securities, you decrease the investor base with access which could add to increased volatility as well as making the acquisition and disposition of said securities much more difficult. Additionally, further regulations would limit the pool of investors by a yet undetermined threshold, endangering currently held positions and carefully crafted investment plans. Leveraged securities allow all investors to participate in the free market system, rather than a select few. The purchasing of options to create a similar leveraged effect is at least as risky, arguably more risk-filled and complicated, and yet those have no intellectual barriers to entry. I ask you to consider not only the direct effects of these regulations, but also the broader effects that such regulations will have on the rest of the market. The role of regulators should be to monitor companies to see if they are conforming to market rules, not to regulate whether investors are qualified to engage in free-market activity. There are sufficient warnings about the risks involved in trading leveraged and inverse securities; if certain investors do not take the time to research their investments or to ignore the warnings currently in place, then that is an individual decision, not a community-wide issue. Adding more warnings as to the risks of investing in leveraged products is entirely sufficient; but restricting the pool of investors to only those that meet a certain threshold is contrary to a free-market system and could have wide-ranging repercussions that are unable to be seen beforehand. It has already been shown that investors can cause enormous volatility and incur massive losses with standard equities (e.g. meme stocks). Placing restrictions on investors of leveraged and inverse securities misplaces the causes of volatility and intellectual suitability to invest. I urge you to oppose adding restrictions and instead to seek ways to have risk information more easily and widely available, and to maintain a free-market system available to everyone and not just a select few. Thank you for your time.