Inverse and leveraged securities are critical to an investor's ability to hedge portfolios and/or have an opportunity to make money in down or volatile markets, such as the one we are in right now. Without these ETFs, the only options we have for hedging are buying puts or short selling, which is infinitely more dangerous to the retail trader than owning an inverse/leveraged fund. By taking away my right to use these securities, you are limiting my investing options to long positions only, and removing my ability to protect any profits earned from those positions. How does that make investing safer? Calling these securities "complex" is also very misleading. An inverse security simply moves in the opposite direction of the index it is tracking. A leveraged security moves in a multiple (usually two or three times) of the percentage change in the index. If you have any restrictions on trading these, it should be limited to a simple reading comprehension test. The math skills needed are learned in high school. And I have never seen a security prospectus that fails to adequately emphasize any potential risks in simple, direct language. Investment decisions should be made based on economic considerations, and not limited by needlessly restrictive rules and regulations. Rules and regulations should be used to prevent the next Bernie Madoff. The vast majority of investors would benefit more if you spent your budget on identifying and prosecuting people who unscrupulously take advantage of them, rather than figuring more ways to limit the choice of public securities available to me as I manage my portfolio. Because of these facts, I hereby register my opposition to S7-42-15. Thank you for considering these facts.
John Watson Comment On Regulatory Notice 22-08
Inverse and leveraged securities are critical to an investor's ability to hedge portfolios and/or have an opportunity to make money in down or volatile markets, such as the one we are in right now. Without these ETFs, the only options we have for hedging are buying puts or short selling, which is infinitely more dangerous to the retail trader than owning an inverse/leveraged fund. By taking away my right to use these securities, you are limiting my investing options to long positions only, and removing my ability to protect any profits earned from those positions. How does that make investing safer? Calling these securities "complex" is also very misleading. An inverse security simply moves in the opposite direction of the index it is tracking. A leveraged security moves in a multiple (usually two or three times) of the percentage change in the index. If you have any restrictions on trading these, it should be limited to a simple reading comprehension test. The math skills needed are learned in high school. And I have never seen a security prospectus that fails to adequately emphasize any potential risks in simple, direct language. Investment decisions should be made based on economic considerations, and not limited by needlessly restrictive rules and regulations. Rules and regulations should be used to prevent the next Bernie Madoff. The vast majority of investors would benefit more if you spent your budget on identifying and prosecuting people who unscrupulously take advantage of them, rather than figuring more ways to limit the choice of public securities available to me as I manage my portfolio. Because of these facts, I hereby register my opposition to S7-42-15. Thank you for considering these facts.