FINRA correctly recognizes the rise of retail trading of complex products. However, this is characteristic of financial bubbles and euphorias. The problem is the systemic issues that led to this bubble in the first place (irresponsible monetary policy) - not the retail traders themselves
I use non-leveraged inverse ETFs from ProShares to hedge market risk. I have read the prospectus from beginning to end. I understand the primary risk of daily compounding. When I place an order, my broker warns me with a message that these products are high risk. When I was negative on my position in 2021, I received an appropriate letter from my brokerage reminding me of the risks of inverse ETFs. I check my account multiple times daily to monitor my positions. The ETFs track their objectives reasonably closely. These products were stress tested during the GFC and 3/2020 and achieved their objectives reasonably closely.
Please do not make it difficult for responsible retail traders to use these products to achieve their desired goals. Hedging (and leverage) should be available for everyone - not just the hedge fund class.
R K Comment On Regulatory Notice 22-08
FINRA correctly recognizes the rise of retail trading of complex products. However, this is characteristic of financial bubbles and euphorias. The problem is the systemic issues that led to this bubble in the first place (irresponsible monetary policy) - not the retail traders themselves
I use non-leveraged inverse ETFs from ProShares to hedge market risk. I have read the prospectus from beginning to end. I understand the primary risk of daily compounding. When I place an order, my broker warns me with a message that these products are high risk. When I was negative on my position in 2021, I received an appropriate letter from my brokerage reminding me of the risks of inverse ETFs. I check my account multiple times daily to monitor my positions. The ETFs track their objectives reasonably closely. These products were stress tested during the GFC and 3/2020 and achieved their objectives reasonably closely.
Please do not make it difficult for responsible retail traders to use these products to achieve their desired goals. Hedging (and leverage) should be available for everyone - not just the hedge fund class.