After reviewing Regulatory Notice #22-08, I, who am a retail investor using leveraged funds for approximately 8 years, believe the concerns and educational requirements being proposed by FINRA to be justified and appropriate. I would like to differentiate between risk levels for various types of products. Leveraged ETFs tracking very large underlying markets such as S&P500, the DOW or NASDAQ are inherently lower risk than funds tracking volatility. There should clearly be a gradient in allowing skilled investors to choose the lower risk products versus extremely high risk, high volatility, high likelihood of "failure" products that trigger based on a criteria that is reasonably met. Many ETP providers have reasonable, lower risk of failure products with appropriately worded prospectus. Some ETPs are highly speculative with trigger mechanism for fund closure that are likely. A prospectus must be able to grade and clearly identify the different levels of risk involved so that retail investors such as myself aren't simply confronted with a barrage of risk statements that lose their impact due to sameness. I appreciate and will continue to want to invest in a grade of leveraged ETPs that are well structured to allow higher volatility, yet acceptable opportunities. Please do not throw the baby out with the bathwater.
Kenneth Burns Comment On Regulatory Notice 22-08
After reviewing Regulatory Notice #22-08, I, who am a retail investor using leveraged funds for approximately 8 years, believe the concerns and educational requirements being proposed by FINRA to be justified and appropriate. I would like to differentiate between risk levels for various types of products. Leveraged ETFs tracking very large underlying markets such as S&P500, the DOW or NASDAQ are inherently lower risk than funds tracking volatility. There should clearly be a gradient in allowing skilled investors to choose the lower risk products versus extremely high risk, high volatility, high likelihood of "failure" products that trigger based on a criteria that is reasonably met. Many ETP providers have reasonable, lower risk of failure products with appropriately worded prospectus. Some ETPs are highly speculative with trigger mechanism for fund closure that are likely. A prospectus must be able to grade and clearly identify the different levels of risk involved so that retail investors such as myself aren't simply confronted with a barrage of risk statements that lose their impact due to sameness. I appreciate and will continue to want to invest in a grade of leveraged ETPs that are well structured to allow higher volatility, yet acceptable opportunities. Please do not throw the baby out with the bathwater.