Yet systematic risks linked to the cohort prompted both the Securities and Exchange Commission and the Financial Industry Regulatory Authority to announce potential new rules for the products in the past year.
Peter Tchir at Academy Securities is among those to note the uptick in leveraged ETF activity this year. In May he wrote that while such products are less powerful than in prior market dramas, they’re big enough to create “a limit down day” if they suffer outflows and rebalancing that accelerates broader selling.
-With assistance from Vildana Hajric and Denitsa Tsekova.
This article was provided by Bloomberg News.