The checks and balances are already in place. The prospectus' already make clear what the risk of leveraged investment or inverse investment tools are. The clearing brokers also ask the right questions before trading in these tools is allowed. The losses suffered by small investors who do not understand the risks they take are a just prize for ignorance. Nothing trains the investor to sharpen their skills like learning from poor and uninformed investment decisions. This ultimately makes the markets stronger and better in the long run.
Having a new layer of government regulation on top of the current bureaucracy is not only a waste of time and resource, but it will surely draw an even greater divide between large institutional investors and the average small investor. Small investors are already placed at a disadvantage by large institutions who remove liquidy from the markets via Block Trades and Dark Pools, and they are further taxed by High Frequency Traders who continual shave margin off the prevailing bid and offer of a security. Small investors also do not enjoy a seat at the table of private equity or IPOs.
Given the fact that the playing field for small investors is very uneven, high leveraged / inverse derivatives give small investors a chance to compete for better returns. In addition, they also allow them to efficiently hedge their risk on things like their retirement accounts or other parts of their core portfolio. As such, limiting or discouraging investors to use these tools could actually have a larger detrimental effect on their total net worth.
For those investors who use high leveraged derivatives based purely on greed, the markets will treat them no differently than those who buy too many investment properties, buy too many lottery tickets or play too many rounds of poker. Whether they learn from their mistakes is entirely their choice. The key message here is that the GOVERNMENT CANNOT REGULATE GREED. More importantly, by allowing some investors to fail at their own hands you are also giving them and others the best opportunity to succeed when they take or hedge away the appropriate risks.
As such, I oppose any new restrictions on my right to trade high leveraged or inverse derivatives.
For the Public
FINRA DATA
FINRA Data provides non-commercial use of data, specifically the ability to save data views and create and manage a Bond Watchlist.
For Industry Professionals
FINPRO
Registered representatives can fulfill Continuing Education requirements, view their industry CRD record and perform other compliance tasks.
For Member Firms
FINRA GATEWAY
Firm compliance professionals can access filings and requests, run reports and submit support tickets.
For Case Participants
DR PORTAL
Arbitration and mediation case participants and FINRA neutrals can view case information and submit documents through this Dispute Resolution Portal.
Need Help? | Check System Status
Log In to other FINRA systems
Luis Rangel Comment On Regulatory Notice 22-08
The checks and balances are already in place. The prospectus' already make clear what the risk of leveraged investment or inverse investment tools are. The clearing brokers also ask the right questions before trading in these tools is allowed. The losses suffered by small investors who do not understand the risks they take are a just prize for ignorance. Nothing trains the investor to sharpen their skills like learning from poor and uninformed investment decisions. This ultimately makes the markets stronger and better in the long run.
Having a new layer of government regulation on top of the current bureaucracy is not only a waste of time and resource, but it will surely draw an even greater divide between large institutional investors and the average small investor. Small investors are already placed at a disadvantage by large institutions who remove liquidy from the markets via Block Trades and Dark Pools, and they are further taxed by High Frequency Traders who continual shave margin off the prevailing bid and offer of a security. Small investors also do not enjoy a seat at the table of private equity or IPOs.
Given the fact that the playing field for small investors is very uneven, high leveraged / inverse derivatives give small investors a chance to compete for better returns. In addition, they also allow them to efficiently hedge their risk on things like their retirement accounts or other parts of their core portfolio. As such, limiting or discouraging investors to use these tools could actually have a larger detrimental effect on their total net worth.
For those investors who use high leveraged derivatives based purely on greed, the markets will treat them no differently than those who buy too many investment properties, buy too many lottery tickets or play too many rounds of poker. Whether they learn from their mistakes is entirely their choice. The key message here is that the GOVERNMENT CANNOT REGULATE GREED. More importantly, by allowing some investors to fail at their own hands you are also giving them and others the best opportunity to succeed when they take or hedge away the appropriate risks.
As such, I oppose any new restrictions on my right to trade high leveraged or inverse derivatives.