I oppose any restriction on individual investors use of inverse or leveraged ETFs. I personally have used inverse and leveraged ETFs to protect myself during periods of market volatility as a means to limit my downside risk while keeping invested in the market. I except to lose a certain amount of money on these instruments in many instances but accept that cost because of the downsides of liquidating other positions within the market. Certainly, these instruments carry risk but any investment has risk. Removing this instrument will force me to engage in use of options and puts and calls. Instruments which are more difficult to use for many investors or which others, like myself, would rather not use due to the expenses on both their purchase and on any gains associated with them. Additionally, I believe derivatives carry a greater risk than inverse or leveraged etfs to the individual investor. If systemic risk is the concern I would argue the larger question of should anyone (institutions, funds or individuals) be able to buy or sell derivatives of indexes in the days of high speed high frequency computerized trading?
Thus, to summarize, inverse and leveraged etfs provide myself and other individual investors useful risk management tools that otherwise would not be affordable or the average portfolio at a reasonable cost.
Matthew Kortes Comment On Regulatory Notice 22-08
I oppose any restriction on individual investors use of inverse or leveraged ETFs. I personally have used inverse and leveraged ETFs to protect myself during periods of market volatility as a means to limit my downside risk while keeping invested in the market. I except to lose a certain amount of money on these instruments in many instances but accept that cost because of the downsides of liquidating other positions within the market. Certainly, these instruments carry risk but any investment has risk. Removing this instrument will force me to engage in use of options and puts and calls. Instruments which are more difficult to use for many investors or which others, like myself, would rather not use due to the expenses on both their purchase and on any gains associated with them. Additionally, I believe derivatives carry a greater risk than inverse or leveraged etfs to the individual investor. If systemic risk is the concern I would argue the larger question of should anyone (institutions, funds or individuals) be able to buy or sell derivatives of indexes in the days of high speed high frequency computerized trading?
Thus, to summarize, inverse and leveraged etfs provide myself and other individual investors useful risk management tools that otherwise would not be affordable or the average portfolio at a reasonable cost.