I am a retail investor and have been trading various of these “complex” products for well over a decade (leveraged/inverse ETF’s and options). I find the premise of this Regulatory notice to be highly suspect – that retail investors are not sophisticated enough to be able to trade these PUBLIC instruments and should have sufficiently high impediments put in place to discourage or bar their use ( i.e. Restrictions or limitations on retail customer access to complex products (e.g., limiting access to high-net worth or other categories of customers)). I can say that myself and many other investors in my investing circle would stand to disagree – we are no longer living in an era where access to information and knowledge is scarce – free educational materials abound in this digital age – much of it of sufficiently high quality that retail investors – reflective of Americas entrepreneurial spirit – can learn and master these “complex” products, and cut out the middleman and much of the friction in the process. Have you considered that the root cause for a growing number of accounts trading these instruments is a reflection of the increased knowledge and elevated skillset among the retail investing public? Look to your own examples you provided in the notice – they are all of “members” or “brokers” that provided bad advice – NOT of the retail investor who trades his or her own account. Yet the suggested remedy is to place impediments or outright prohibiting retail investors from access to PUBLICLY TRADED instruments. Maybe you should focus on the members/brokers who are giving the bad advice and educate or sanction them, rather than punishing all retail investors. Who will this regulation harm if it goes through? It will harm the average retail investor - those who are trading their own accounts, who have taken the time to learn how to invest in these instruments, who are refining their investment skills but don’t yet have that “high net worth” - but are aspiring to reach it. Several of my investment buddies are minorities – they are not “high net worth” individuals – but they aspire to be. They would be disproportionally affected by this regulation. Bottom line, I think retail investors as a whole are far more sophisticated than this regulation is giving them credit, and the net effect of passing these proposed regulations would be to harm the average retail investor, while high net worth individuals would continue to reap the rewards.
Paul Fernandes Comment On Regulatory Notice 22-08
I am a retail investor and have been trading various of these “complex” products for well over a decade (leveraged/inverse ETF’s and options). I find the premise of this Regulatory notice to be highly suspect – that retail investors are not sophisticated enough to be able to trade these PUBLIC instruments and should have sufficiently high impediments put in place to discourage or bar their use ( i.e. Restrictions or limitations on retail customer access to complex products (e.g., limiting access to high-net worth or other categories of customers)). I can say that myself and many other investors in my investing circle would stand to disagree – we are no longer living in an era where access to information and knowledge is scarce – free educational materials abound in this digital age – much of it of sufficiently high quality that retail investors – reflective of Americas entrepreneurial spirit – can learn and master these “complex” products, and cut out the middleman and much of the friction in the process. Have you considered that the root cause for a growing number of accounts trading these instruments is a reflection of the increased knowledge and elevated skillset among the retail investing public? Look to your own examples you provided in the notice – they are all of “members” or “brokers” that provided bad advice – NOT of the retail investor who trades his or her own account. Yet the suggested remedy is to place impediments or outright prohibiting retail investors from access to PUBLICLY TRADED instruments. Maybe you should focus on the members/brokers who are giving the bad advice and educate or sanction them, rather than punishing all retail investors. Who will this regulation harm if it goes through? It will harm the average retail investor - those who are trading their own accounts, who have taken the time to learn how to invest in these instruments, who are refining their investment skills but don’t yet have that “high net worth” - but are aspiring to reach it. Several of my investment buddies are minorities – they are not “high net worth” individuals – but they aspire to be. They would be disproportionally affected by this regulation. Bottom line, I think retail investors as a whole are far more sophisticated than this regulation is giving them credit, and the net effect of passing these proposed regulations would be to harm the average retail investor, while high net worth individuals would continue to reap the rewards.