SEC Examining Complex ETF Products Popular in Market Downturns
- Agency chief warns about risks of leveraged, inverse ETFs
- Investors have flocked to derivatives trades amid volatility
Gary Gensler
Photographer: Evelyn Hockstein/Reuters/Bloomberg
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The US Securities and Exchange Commission is ratcheting up its scrutiny of investment firms using leveraged and inverse exchange-traded funds to hedge against market volatility.
The products “can pose risks even to sophisticated investors, and can potentially create system-wide risks by operating in unanticipated ways when markets experience volatility or stress conditions,” Chair Gary Gensler said Wednesday in remarks at an industry event.