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- Address at ICI's 2017 Securities Law Developments Conference - SEC Commissioner Stein
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- Wells Fargo Sanctions Are on Ice Under Trump Official
- Josh Brown: Here's How to Buy Bitcoin, But Realize It Could Be One Giant Bubble
- Trump's New Tax Plan Could Cost Citigroup $20 Billion
- Morgan Stanley Fires Former Congressman Harold Ford Jr.
- Al Franken Will Resign Over Sexual Misconduct Allegations - His Full Resignation Speech
- Ex-NFL Player Gets 40 Years for Running $10Mn Fraud
- Bitcoin Blows Past $15K, Adding $2K in Under 12 Hours
- Financial Adviser Settles Charges for Defrauding Private Equity Fund Investors
- New Cross Market Equity Supervision Report Cards - FINRA Phone-In Workshop, WebEx Presentation
- Mueller Just Crossed Trump's Red Line, With Deutsche Bank Subpoena
- Wildfire Rages Near Los Angeles
- Former Company Insider Has $4.1Mn Payday as a Whistleblower
- Audit Firm, Anton & Chia, Conducted Fraudulent Audits of Penny Stock Companies - SEC
- Mueller Subpoenas Deutsche Bank Records on Trump and Family
- Bitcoin Nearly Halfway to $400Bn Value Predicted by Winklevoss Twins 4 Years Ago
- Fidelity Clients Suffer Second Website Glitch in Week
- CBOE Beats CME to Bitcoin Futures Launch with December 10 Start
- McKinsey Senior Exec Thomas Barkin Named New Head of Federal Reserve Bank of Richmond
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NEWSLETTERS & ALERTS
Wall Street News
Don’t See the SEC Approving These Volatile ETFs
by Howard Haykin
Traders and, to a lesser extent investors, presently can choose from among nearly 300 leveraged ETFs that offer significantly leveraged returns – as in 2-times or 3-times the returns of various indexes and asset classes. And the best performer from this group is the Direxion Daily Semiconductor Bull 3X Shares, which is up 328% over the past 12 months. It provides 3-times the gains of the semiconductor sector.
Currently, the ForceShares UP and DOWN funds are in the crosshairs of the SEC. Earlier this month, the Commission approved a application that would have created 2 ETF offerings – the ForceShares Daily 4X U.S. Market Futures Long Fund, and the ForceShares Daily 4X US Market Futures Short Fund. Using derivatives, the funds would generate 4-times the gains or losses of the S&P Futures contract.
However, in response to complaints that the funds’ volatility could lead to losses by unsophisticated or unsuspecting investors, the SEC Chair and his 2 Commissioners are reviewing the staff’s approval to decide whether to delay approval. The application may even be put out for comment.
FINANCIALISH TAKE-AWAY. Boy, we’ve come a long way since the inception of exchange traded products, about 24 years ago. According to Investopedia, the American Stock Exchange released the S&P 500 Depository Receipt – aka the SPDR or "spider" for short) in January of 1993. It was very popular, and it is still one of the most actively-traded ETFs today. Then, 15 years later, the first actively-managed ETF reached the market. Finally, these days, we have 273 highly leveraged ETFs.
Over the past several months, the SEC rejected the applications of two Bitcoin-based ETFs, expressing concern for the volatility of the underlying currency. Just like the Bitcoin funds, ForceShares’ UP and DOWN funds carry enormous risk and volatility. And in this day and age, all these volatile market vehicles are sure to wreak havoc among smaller and unsophisticated traders or investors.
Hopefully, the SEC will be prudent and place a moratorium on these volatile funds.