Leveraged products are a useful, and even vital, tool in creating a portfolio to weather volatile markets in a high inflation economy. Restricting access to them, especially now, and reducing investor choices only makes the environment for investors worse. If such leveraged ETFs are unavailable, investors may have no choice but to take on significantly more risk (and at higher expense) by creating their own equivalent synthetic positions with puts and calls. Most passive investors have neither the time, resources, nor expertise for that, but they will try anyway. The unintended consequences of such restrictions are difficult to predict, while history demonstrates that there are no significant issues with the status quo.
Protecting investors from fraud is welcome, but other than that leave us alone to make our own choices.
Timothy Jacobs Comment On Regulatory Notice 22-08
Leveraged products are a useful, and even vital, tool in creating a portfolio to weather volatile markets in a high inflation economy. Restricting access to them, especially now, and reducing investor choices only makes the environment for investors worse. If such leveraged ETFs are unavailable, investors may have no choice but to take on significantly more risk (and at higher expense) by creating their own equivalent synthetic positions with puts and calls. Most passive investors have neither the time, resources, nor expertise for that, but they will try anyway. The unintended consequences of such restrictions are difficult to predict, while history demonstrates that there are no significant issues with the status quo.
Protecting investors from fraud is welcome, but other than that leave us alone to make our own choices.