I feel strongly that FINRA's proposed rule (#22-08) is incorrectly applies 'investor protection' as FINRA's stated purpose is, specifically with regard to leveraged and inverse products. As a user of such products, were these rules implemented, I would be forced to potentially re-create the same sort of exposure on my own which is a far greater risk to my own personal net worth than it is to invest with professional money managers.
These protects effectively protect me from me - where my $10,000 investment in a 3x levered ETF is far less risky than taking a $30,000 loan to do create the same type of exposure.
I feel that I was adequately warned of the risks of purchasing this product by Schwab. It was made very clear that it is a buyer-beware investment, so for FINRA to impose restrictions or gates on these types of investments would only serve to limit the number of market participants which has downstream effects as well - reduced market liquidity, wealth inequality immediately come to mind. The solutions presented - passing a test, demonstrate a high net worth, special approval - create unnecessary frictions for regular people to invest.
However - some solutions presented - attesting to reading materials, cooling off periods - make more sense for investor protection by educating and mitigating emotional and behavioral biases. These are the types of common sense solutions that should be implemented, if any - but capital market restriction is unacceptable.
Kyle Hercher Comment On Regulatory Notice 22-08
I feel strongly that FINRA's proposed rule (#22-08) is incorrectly applies 'investor protection' as FINRA's stated purpose is, specifically with regard to leveraged and inverse products. As a user of such products, were these rules implemented, I would be forced to potentially re-create the same sort of exposure on my own which is a far greater risk to my own personal net worth than it is to invest with professional money managers.
These protects effectively protect me from me - where my $10,000 investment in a 3x levered ETF is far less risky than taking a $30,000 loan to do create the same type of exposure.
I feel that I was adequately warned of the risks of purchasing this product by Schwab. It was made very clear that it is a buyer-beware investment, so for FINRA to impose restrictions or gates on these types of investments would only serve to limit the number of market participants which has downstream effects as well - reduced market liquidity, wealth inequality immediately come to mind. The solutions presented - passing a test, demonstrate a high net worth, special approval - create unnecessary frictions for regular people to invest.
However - some solutions presented - attesting to reading materials, cooling off periods - make more sense for investor protection by educating and mitigating emotional and behavioral biases. These are the types of common sense solutions that should be implemented, if any - but capital market restriction is unacceptable.