Hi everyone,
In the event that you’re not already aware of this, I wanted to bring to your attention the new FINRA regulations regarding leveraged ETFs, which become effective on Tuesday, December 1, 2009.
In essence, FINRA is increasing the maintenance margin requirements for leveraged ETFs by a factor relative to their respective leverage. In effect, if your broker requires a 30% maintenance requirement currently on a double leveraged ETF, it will now be 60%. Likewise, a triple leveraged ETF will be changed to a 90% maintenance requirement.
In addition, these increased maintenance requirements also apply to uncovered options on leveraged ETFs and your day trading buying power with respect to leveraged ETFs. So, for example, if you day trade a double leveraged ETF, you will no longer have four times your account balance, you will only have two times for day trading purposes.
For your reading pleasure, here’s the link to the actual FINRA Regulatory Notice 09-53
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p119906.pdf
If you have any comments or questions, please feel free to email me and I'll respond promptly.
Regards,
Jim T.
http://etftimer.collective2.com
etftimer@yahoo.com
Sunday, November 29, 2009
Sunday, November 1, 2009
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