April 17, 2020
This is clearly a bad idea. The SEC should not hinder the ability of investors to trade inverse and leveraged funds.
I routinely use such instruments in order to hedge my (and my clients') portfolios and reduce volatility during bear markets. I also use leveraged funds for their efficient access to aggressive returns when warranted. In the absence of leveraged and inverse exposure funds, investors would likely seek out the exposure through short selling, options or the futures markets.
With the newly released CME Micro Index futures contracts, retail investors now have easy and liquid access to 5X leveraged long and short exposures. This might become an unintended consequence of the SEC limiting access to leveraged and inverse securities - investor money might begin to migrate into the derivatives markets.