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- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Wall Street News
Does the Market Really Need Highly Leveraged ETFs?
by Howard Haykin
The WSJournal reported that shares of a triple-leveraged ETF that trades on NYSE Arca - Direxion Daily MSCI Brazil Bull 3x ETF (BRZU) – plunged 48% last Thursday because of reports that Brazilian President Michel Temer was involved in an alleged bribery. The following day, Friday, the ETF advanced 18%.
Needless to say, Thursday’s slide was one of the largest-ever declines in an ETF, highlighting the risks “facing investors who use so-called leverage exchange-traded funds in highly volatile areas in a bid to turbocharge their returns.”
Such a market play may be appropriate for day traders, but certainly not for average or unsuspecting investors. Yet, it’s available at the push of a button at an online broker-dealer or through a supposedly unsolicited order placed with a ‘bricks-and-mortar’ brokerage firm.
The SEC is the gatekeeper for approving or rejecting applications to list securities and securities products. This was the subject of a recent Financialish.com article regarding the pending applications for two new exchange traded funds – the ForceShares Daily 4X U.S. Market Futures Long Fund and the ForceShares Daily 4X US Market Futures Short Fund. Both applications were approved by SEC Staffers, but SEC Commissioners are having second thoughts and now may put the applications out for comment. GOOD!
The ‘need for speed’ is something that should not be regarded lightly. Perhaps such highly leveraged products and securities should be designated to the financial futures markets – and under the oversight of the CFTC.
Is Financialish.com being overly protective? Share your thoughts.