I strongly support FINRA's mission to protect investors from ensuring an open, honest, and fair securities market, a key piece of which is striving to align investor needs and goals with product choice. It is probably or even likely that "complex" products are not appropriate for most investors, and to that end these products are broadly not used by most investors. Few defined contribution plans include such products, both due to the higher cost and unsuitability for many investors. However, complex products are appropriate for some investors based on their risk tolerance, investment goals, and hedging strategies. I do not think it is the place of FINRA to limit the ability of such investors to access a variety of investment vehicles. Investor education may be an appropriate method for FINRA to balance the public interest with maintaining a robust securities market, though I do not think FINRA is the appropriate venue or organization to spearhead such an effort; those institutions most equipped and tasked with doing so have failed to an astounding degree over the past half-century. Setting arbitrary income and wealth standards has and always will be inappropriate. Nothing reinforces the broad public perception that markets are rigged by excluding the vast majority of the public from select investments based solely on their current financial status. Money should never be the reason government prohibits an investor from access to a specific product. Lastly, prior to any final ruling FINRA must provide a firm definition of what constitutes a complex product. Financial markets change rapidly which makes product regulation challenging, but the risk to the general population of new, complex products is narrow. Option products are well defined and easily within FINRA's capacity to delineate. As are simple, leveraged products. There is no reason FINRA could not devise a definition of "complex" to clearly include or exclude the non-vanilla products most used by the investing public.
Josh Horn Comment On Regulatory Notice 22-08
I strongly support FINRA's mission to protect investors from ensuring an open, honest, and fair securities market, a key piece of which is striving to align investor needs and goals with product choice. It is probably or even likely that "complex" products are not appropriate for most investors, and to that end these products are broadly not used by most investors. Few defined contribution plans include such products, both due to the higher cost and unsuitability for many investors. However, complex products are appropriate for some investors based on their risk tolerance, investment goals, and hedging strategies. I do not think it is the place of FINRA to limit the ability of such investors to access a variety of investment vehicles. Investor education may be an appropriate method for FINRA to balance the public interest with maintaining a robust securities market, though I do not think FINRA is the appropriate venue or organization to spearhead such an effort; those institutions most equipped and tasked with doing so have failed to an astounding degree over the past half-century. Setting arbitrary income and wealth standards has and always will be inappropriate. Nothing reinforces the broad public perception that markets are rigged by excluding the vast majority of the public from select investments based solely on their current financial status. Money should never be the reason government prohibits an investor from access to a specific product. Lastly, prior to any final ruling FINRA must provide a firm definition of what constitutes a complex product. Financial markets change rapidly which makes product regulation challenging, but the risk to the general population of new, complex products is narrow. Option products are well defined and easily within FINRA's capacity to delineate. As are simple, leveraged products. There is no reason FINRA could not devise a definition of "complex" to clearly include or exclude the non-vanilla products most used by the investing public.