I was very concerned to hear of the proposed regulatory changes for leveraged and inverse funds.
While I support the surface notion of FINRA protecting retail investors, I do not believe restricting access to these "complex investments" is in any way an appropriate step.
Education is a worthwhile goal, but mandating licensing or other knowledge tests prior to purchasing a specific asset will not advance this goal. Many of the investors FINRA seeks to educate will doubtless seek out other speculative, unregulated assets instead (namely cryptocurrencies).
Any investment involves risk; brokers should have incentives to inform their clients of these risks, but forcing these brokers (and/or their clients) to comply with further regulatory hurdles will not advance the interests of either party. Note that many of the "complex investments" that appear subject to further regulation are in fact useful tools for retail investors.
Restricting access to existing public investments would further undermine trust in the regulatory body, especially if that access is restricted only to institutional or high net worth investors.
Indeed, I am obligated to point out that creating further testing or criteria-based barriers to using these public products appears to be in the best interests of parties who offer licensing and educational materials, namely FINRA. It would be in FINRA's best interest to avoid this apparent conflict of interest when the underlying concern is so misplaced.
I appreciate your consideration on this matter. I strongly encourage FINRA not to proceed with the proposed regulatory measures detailed in notice 22-08.
James Lewis Comment On Regulatory Notice 22-08
To whom it may concern:
I was very concerned to hear of the proposed regulatory changes for leveraged and inverse funds.
While I support the surface notion of FINRA protecting retail investors, I do not believe restricting access to these "complex investments" is in any way an appropriate step.
Education is a worthwhile goal, but mandating licensing or other knowledge tests prior to purchasing a specific asset will not advance this goal. Many of the investors FINRA seeks to educate will doubtless seek out other speculative, unregulated assets instead (namely cryptocurrencies).
Any investment involves risk; brokers should have incentives to inform their clients of these risks, but forcing these brokers (and/or their clients) to comply with further regulatory hurdles will not advance the interests of either party. Note that many of the "complex investments" that appear subject to further regulation are in fact useful tools for retail investors.
Restricting access to existing public investments would further undermine trust in the regulatory body, especially if that access is restricted only to institutional or high net worth investors.
Indeed, I am obligated to point out that creating further testing or criteria-based barriers to using these public products appears to be in the best interests of parties who offer licensing and educational materials, namely FINRA. It would be in FINRA's best interest to avoid this apparent conflict of interest when the underlying concern is so misplaced.
I appreciate your consideration on this matter. I strongly encourage FINRA not to proceed with the proposed regulatory measures detailed in notice 22-08.