March 10, 2020
Proposed Rule #s7-24-15 regarding restricted use of leveraged and inverse funds should not be implemented.
As a trader in these funds, I fully understand the characteristics and risks. These funds are not intended for long holding perriods as they are designed to capture short term trends in the underlying indices. All funds, leveraged or otherwise, have a prospectus which any prudent investor must review before committing capital. The Leveraged and Inverse Funds clearly state the risk and purpose of the instument. The current information in the prospectuses provide a clear and concise explanation of how to use and not use these funds. Of particular interest to me is that these funds do not over time mimic the performance of the underlying index.
I have instantaneous access to my positions and watchlists across multiple electronic devices, including my smartphone, so monitoring these investments closely and frequently is a routine practice of mine. I check on these leveraged and inverse positions multiple times during the day.
I consider it a gross overreach that my broker would determine my eligibilty to trade these funds, particularly since I have used them for 5 years across 3 different trading platforms. What is next? Will my broker question all my trade decisions, to include other types of funds besides leveraged and inverse funds? I want the freedom to invest when and where I want while understanding the nature and risks of all my investments without a third party dictating my actions.
There are sufficient warnings on the order entry screens for all my accounts. Before I complete an order, I recieve a pop up warning in red letters advising my of the risk before I commit. So, a review of the prospectus and a warning at order entry is more than sufficient to advise any trader of the risk associated with misuse of these funds. Any more layers of regulation are not necessary.
As a frequent user of ths funds, I believe that I am automatically qualified to continue to use them and do not need my broker's intervention in the future.