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Stories of Interest
- Deutsche Bank Is Weighing Massive Cuts in Its U.S. Cash Equities Unit
- Richard Jenrette, Co-Founder of DLJ Investment Bank, Dies at 89
- Goldman Sachs Makes First Hire in Cryptocurrency Markets Unit
- Special FINRA Election to Fill Large Firm Governor Vacancy
- Chicago-Based Investment Adviser Sentenced to 151 Months in Prison - SEC
- Dun & Bradstreet Hit With FCPA Violations - SEC
- SEC Charges Additional Defendant in Fraudulent ICO Scheme
- Warren Buffett Simply Blew it on Wells Fargo Stock: Dick Bove (Video)
- Barclays and Deutsche Bank to Lag U.S. Trading Peers
- NY AG Schneiderman Seeks to Close Loophole That Could Let Trump Pardons Block State Charges
- 'Fearless Girl' is Moving to NYSE After Year Staring Down 'Charging Bull'
- What's In Your Wallet - American Express Shares Soar After Earnings Release
- Deutsche Bank's Executive Departures Continue Following Change in CEO
- Reflections of an Economist Commissioner (SEC's Piwowar)
- Billionaire HF Manager and The Fed Chair Runner-Up are Investing in New Cryptocurrency
- Court Finds 2 Brokers Liable for Fraud Involving Mortgage-Backed Securities
- One FINRA: An Organization’s Commitment to Diversity and Inclusion
- 2018 GASB Accounting Support Fee to Fund the Governmental Accounting Standards Board
- Barclays Eyes Move Into Cryptocurrency Trading
- Goldman Breaks From Wall Street Pack with Bond-Trading Boom
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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.