FINRA To Raise Margin Requirement On Leveraged ETFs
Finra said it plans increased margin requirements for leveraged funds and uncovered options tied to the funds starting Dec. 1.
Margin requirements for ETFs and options will be increased “by a factor commensurate with their leverage,” according to the Financial Industry Regulatory Authority. The current margin requirement is typically 25% of the market value of a long ETF and 30% for a short ETF.
New margin requirements will not exceed 100% of the market value, according to Finra. Finra has already taken steps to warn brokers and investors leveraged ETFs can be tricky for inexperienced traders to handle.