An inverse ETF or even a leveraged ETF takes far less knowledge and understanding to invest in safely than a whole host of other publicly traded securities for which no similar requirements are being imposed. All one has to understand is that the security is designed to and reasonably likely to trade in the manner it is advertised by its promotors .... which is usually tracking an index or the inverse of an index. That is the same amount of knowledge needed to invest in the index itself. It is far less knowledge than should reasonably be required to invest in components of any index (i.e., individual companies) who all have idiosyncratic risk of all kinds. So, the rule makes no sense. Further, you are increasing over-all risk to investors by limiting their ability to hedge risk with these instruments, which is their primary use for most investors. If an investors chooses to speculate with these instruments, it is no different and probably safer than speculating in a range of securities you don't regulate in the same way as noted above. I personally have used these tools for years in helping to protect my family's nest egg from gyrations in the equity markets. Please call me [REDACTED] if you have any questions or comments.
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Zev Abraham Comment On Regulatory Notice 22-08
An inverse ETF or even a leveraged ETF takes far less knowledge and understanding to invest in safely than a whole host of other publicly traded securities for which no similar requirements are being imposed. All one has to understand is that the security is designed to and reasonably likely to trade in the manner it is advertised by its promotors .... which is usually tracking an index or the inverse of an index. That is the same amount of knowledge needed to invest in the index itself. It is far less knowledge than should reasonably be required to invest in components of any index (i.e., individual companies) who all have idiosyncratic risk of all kinds. So, the rule makes no sense. Further, you are increasing over-all risk to investors by limiting their ability to hedge risk with these instruments, which is their primary use for most investors. If an investors chooses to speculate with these instruments, it is no different and probably safer than speculating in a range of securities you don't regulate in the same way as noted above. I personally have used these tools for years in helping to protect my family's nest egg from gyrations in the equity markets. Please call me [REDACTED] if you have any questions or comments.