FINRA Podcast On Leveraged ETFs

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July 28, 2009 3:19pm ETF BASIC NEWS

finra1On July 13, 2009, FINRA posted a podcast in which it confirmed that FINRA member firms could reasonably recommend that a retail investor hold Leveraged ETFs for longer than one day, provided a suitability


assessment is conducted with respect to such an investor and the ETF. Of particular note, the podcast includes the following statement:

     “Leveraged and inverse ETFs can be appropriate if recommended as part
     of a sophisticated trading strategy that will be closely monitored by
     a financial professional. At times, this trading strategy might
     require a leveraged or inverse ETF to be held longer than one day.”

FINRA also confirmed in the podcast that the suitability rule applies only in the context of a broker-dealer making a recommendation. Listen to the podcast below:

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