FINRA Takes Steps To Regulate The Use Of Margin With Leveraged ETF’s
A new regulation 09-53 published by the FINRA should avoid many novice investors or traders getting badly burnt when playing with leveraged ETF’s. The incredible performance of FAZ the 3x bear financial ETF which managed to get down from 100 $ to 4 $ in a matter of months have illustrated the dangers in letting novice investors play and get burnt by hyper-leveraged ETF’s.
The FINRA regulation rules more specifically the use of margin with leveraged ETF’s, a very dangerous practice which can end in disaster for investors.
It does not prohibit the use of leveraged ETF’s (although in my view, such products should be banned from accounts such as 401k), but increases the margin requirements (which means that compounding the leverage – playing a 3x with margin, ends up doing that – will be effectively neutralized). You may get the original document here or read it below.
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[...] year, leveraged ETFs have been the subject of intense scrutiny from a number of parties, including regulatory agencies, state governments, broker-dealers, individual investors, and even class action lawyers. While [...]
[...] year, leveraged ETFs have been the subject of intense scrutiny from a number of parties, including regulatory agencies, state governments, broker-dealers, individual investors, and even class action lawyers. While [...]
[...] year, leveraged ETFs have been the subject of intense scrutiny from a number of parties, including regulatory agencies, state governments, broker-dealers, individual investors, and even class action lawyers. While [...]