Regulators eye increased trading in complex products (CNBC)

Increasingly popular complex investment products have regulators concerned about the risks they pose for retail investors. FINRA, as well as the SEC, have been looking closely at the amount of trading in products that would be difficult for most retail investors to fully comprehend, including leveraged and inverse exchange-traded products, volatility-linked ETPs, structured products and defined outcome ETFs. FINRA recently issued a regulatory notice to its member firms on the issue, and FrontLine’s Founder and President Amy Lynch sees an indirect message by the regulators to self-directed platforms such as Robinhood. Ms. Lynch, interviewed by CNBC, suggests that the regulators may ask more of these platforms, to either prevent risky trades in certain products or be liable for investor losses. See CNBC, “Regulators are worried that retail traders are getting in over their heads”