I'm an individual investor who trades leveraged products and options on an almost daily basis. Leveraged products and options have become the cornerstone of my investment strategy and provide the income stream I need to live on in my retirement. I've spent over 12 years as an active investor and have put the time and effort into learning how such products work using all the available public information, prospectuses from leveraged product providers, information from CBOE and a LOT of time watching and analyzing the behavior of these leveraged products and options.
I have found that, with the proper information and experience, it's possible to do quite well trading these products. It has not proven to be overly complex and hasn't exposed me to an inordinate amount of risk.
If procedures were put in place such as brought up in the Complex Products and Options sections of the RFC it would be nearly impossible for an individual investor/trader such as myself to benefit from the market like I have. The oversight ideas proposed would be strangling and having a brokerage or product provider constantly looking over my shoulder as I implement my strategies would make it impossible to change and adapt to various market situations.
While it may be acceptable for FINRA to oversee the large players of the investment industry, the ideas proposed in the RFCs would go too deeply into overseeing individual investors rather than the industry. I look to my broker and product providers to give me the tools to work with AFTER I've done my research and self-education and allow me to operate in a way that best suits my objectives, methodologies and risk tolerance. The questions/suggestions in the 22-08 RFC section, if implemented, would remove my freedom to invest and trade in the way I determine best for me.
While it's the FINRAs mission to protect investors from abuses in the industry, it's not their job to protect the investor from himself. What seems imprudent or even reckless investing by an individual may actually work perfectly for them and and achieve the goal they're trying to reach.
It's fundamentally impossible to protect people from themselves and it's important that each investor take the time and be prudent enough to learn what he's doing before he dives in. Plenty of warnings already exist in publicly available information. Implementing any additional "safeguards" will actually only remove the freedom of informed investors to use very powerful leveraged tools to their maximum benefit. Investing and trading are inherently risky (like driving a car) and these risks are made abundantly clear in the public materials already available. To ask brokerages to effectively hand-hold individual investors through their trading will place an unbearable burden on both the brokerages and the investors. Requiring brokers and/or product providers to have to delve so deeply into the the investing practices of individuals would drive the cost of individual investing so high that it may make it impossible. This may be the objective of some involved but it doesn't do the public any good. It's impossible to make investing in the markets risk-free unless you're willing to settle for returns that are so low as to be worthless in a time of high inflation and a shaky economy.
Placing burdens on brokers and product providers as are proposed in most of the questions in the RFC does not protect public investors, which is FINRA's mission; rather, it would effectively bar them from accessing complex products and options that are extremely beneficial when used intelligently. It should not be the job of brokers and product providers to educate individual investors/traders and then have to screen them to allow them access to their products. Individuals must be allowed to use their own common sense, knowledge and willingness to take risks they deem acceptable.
M W Comment On Regulatory Notice 22-08
I'm an individual investor who trades leveraged products and options on an almost daily basis. Leveraged products and options have become the cornerstone of my investment strategy and provide the income stream I need to live on in my retirement. I've spent over 12 years as an active investor and have put the time and effort into learning how such products work using all the available public information, prospectuses from leveraged product providers, information from CBOE and a LOT of time watching and analyzing the behavior of these leveraged products and options.
I have found that, with the proper information and experience, it's possible to do quite well trading these products. It has not proven to be overly complex and hasn't exposed me to an inordinate amount of risk.
If procedures were put in place such as brought up in the Complex Products and Options sections of the RFC it would be nearly impossible for an individual investor/trader such as myself to benefit from the market like I have. The oversight ideas proposed would be strangling and having a brokerage or product provider constantly looking over my shoulder as I implement my strategies would make it impossible to change and adapt to various market situations.
While it may be acceptable for FINRA to oversee the large players of the investment industry, the ideas proposed in the RFCs would go too deeply into overseeing individual investors rather than the industry. I look to my broker and product providers to give me the tools to work with AFTER I've done my research and self-education and allow me to operate in a way that best suits my objectives, methodologies and risk tolerance. The questions/suggestions in the 22-08 RFC section, if implemented, would remove my freedom to invest and trade in the way I determine best for me.
While it's the FINRAs mission to protect investors from abuses in the industry, it's not their job to protect the investor from himself. What seems imprudent or even reckless investing by an individual may actually work perfectly for them and and achieve the goal they're trying to reach.
It's fundamentally impossible to protect people from themselves and it's important that each investor take the time and be prudent enough to learn what he's doing before he dives in. Plenty of warnings already exist in publicly available information. Implementing any additional "safeguards" will actually only remove the freedom of informed investors to use very powerful leveraged tools to their maximum benefit. Investing and trading are inherently risky (like driving a car) and these risks are made abundantly clear in the public materials already available. To ask brokerages to effectively hand-hold individual investors through their trading will place an unbearable burden on both the brokerages and the investors. Requiring brokers and/or product providers to have to delve so deeply into the the investing practices of individuals would drive the cost of individual investing so high that it may make it impossible. This may be the objective of some involved but it doesn't do the public any good. It's impossible to make investing in the markets risk-free unless you're willing to settle for returns that are so low as to be worthless in a time of high inflation and a shaky economy.
Placing burdens on brokers and product providers as are proposed in most of the questions in the RFC does not protect public investors, which is FINRA's mission; rather, it would effectively bar them from accessing complex products and options that are extremely beneficial when used intelligently. It should not be the job of brokers and product providers to educate individual investors/traders and then have to screen them to allow them access to their products. Individuals must be allowed to use their own common sense, knowledge and willingness to take risks they deem acceptable.