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Stories of Interest
- Canada's CIBC Completes $5Bn PrivateBancorp Buy
- Word ‘Women’ Literally Never Appears in U.S. Senate’s 142-Page Health-Care Bill
- Stephen Pierce, Goldman Sachs Global Head of Equity Markets, To Retire
- Al Gore 'Not Very Smart,’ But Became Filthy Rich Using Simple Investing Formula - Charlie Munger
- U.S. Regulators, Lawmakers Support Volcker Rule Revamp at Hearing
- Morgan Stanley Opts for Frankfurt as New EU Hub
- A New Risk for Goldman, Morgan Stanley in Stress Tests (subsc reqd)
- A Trump Bump for Law Firm of President’s Lawyer - Kasowitz Benson Torres
- JPMorgan, BofA, Goldman, Citi, Wells Fargo Pass Fed's Stress Test
- Blackstone Stock Still Trading at $31 - Its IPO Price From 10 Years Ago
- NJ Resident and NY-Based Global FX Club Charged with Solicitation Fraud, Misappropriation - CFTC
- Senate Republicans Release Plan to Replace Obamacare - The Details
- Berkshire Hathaway Throws $1.5Bn Lifeline to Canada's Home Capital
- Inside Nomura: Day in the Life of a Junior Banker
- Inside Travis Kalanick’s Resignation as Uber’s C.E.O.
- Creative Planning, KS Investment Firm, Spurring Change on Wall Street
- SEC Obtains Judgment Against Attorney Who Defrauded Escrow Clients
- SEC Files Fraud Charges Against Stock Promoters in Market Manipulation Scheme
- Power Lunches and Dinners in New York, London, Washington
- Banks to Cut $1.2Bn in Research Spending, Analyst Jobs - McKinsey
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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.
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