Regulators, alert to the risks, are circling, with both the Securities and Exchange Commission and the Financial Industry Regulatory Authority mulling new regulations to clampdown on what they term “complex” products.
To help gain approval for UVIX and SVIX, issuer Volatility Shares made crucial tweaks to the strategies that should make them less risky. That includes a time-weighted average price to set closing values, rather than the 4 p.m. VIX settlement price, designed to avoid creating a spike of trading activity at the closing bell.
All told this week’s huge moves have shown they can pack a punch.
“I am not shocked these two have been successful,” said Eric Balchunas, ETF analyst with Bloomberg Intelligence. “Certain investors crave the juice that a 2x VIX ETF can provide despite the many dangers.”
This article was provided by Bloomberg News.