Subject: File No. S7-24-15
From: Charles J Royce

January 4, 2016

I appreciate that the commission is keeping tabs on the various products available to investors, including those that rely on derivatives. Its wonderful that these types of tools are available to the retail investor and not just limited to an inside cadre of investment banks, fund managers and the like. Leveraged ETFs and similar products are popular and provide excellent tools to all manner of investors for both short-term trading as well as a device for longer-term hedging of a portfolio.

The rules as proposed are concerning and could either intentionally or unintentionally prohibit 2X and 3X ETF funds. These ETFs have served the market well over the past 5-6 years of their existence and sideways and down markets should not be a criteria for prohibition. Lastly, there is no justification for the new leverage restriction because the SEC already imposes collateral requirements that limit a funds derivatives holdings.

Instead of prohibiting such funds, the SEC should look at rules relating to 2X and 3X funds that:

1) Ensure appropriate investor education. Currently investors receive prospectuses that cover the risks and benefits inherent in these funds and are adequate for all manner of other investments.

2) Ensure correct pricing of funds and invest into technology to ensure pricing accuracy even in volitile markets.

3) Ensure funds use appropriate counter-parties to manage risk. Most leveraged funds have inverse equivalents and can ensure that such funds provide balance.

4) Grandfather existing funds. One can try to justify that that the continued creation of more and more funds with additional complexity could have some detrimental affect on the markets. However, the markets have functioned fine with the existing number and structure of leveraged ETFs. I recommend that the SEC grandfathers existing funds regardless of rule outcomes for an indefinite period of time.

Thank you for taking the time to consider my feedback.