May 10, 2020
re proposal S7-24-15:
I do not agree with the proposed rules, for the following reasons:
- Leveraged and/or inverse ETPs ('the products') are fairly simple and have bounded losses. They do not require a high level of sophistication to utilize effectively.
- Placing the burden of due diligence on brokers will likely cause brokers to charge (higher) fees for the products, or eliminate the ability to trade them altogether.
- The products are an effective way to hedge or achieve leverage. For investors, especially retail investors, the primary alternative is options, which are significantly MORE complicated than the products in question. Placing a burden of due diligence on brokers equivalent to that of options feels excessive.
I do not believe any due diligence on the part of brokers should be required, except perhaps an advisory/warning statement to read the prospectus for such products.