Last week, the Securities and Exchange Commission (SEC) proposed an updated framework covering derivatives which are widely used by portfolio managers to run investment funds more efficiently. Since then, clear divisions have emerged among top U.S. financial regulators over the proposed rules with additional rules covering leveraged exchange-traded funds (ETFs), prompting lively debates among regulators. Under these new rules, retail investors will have to complete questionnaires to demonstrate that they understand the risks of leveraged ETFs – and the rules also set a limit of 300 percent of their underlying index. SEC commissioners Elad Roisman and Hester Price have released a joint statement objecting to the proposal. Commissioners Robert Jackson and Allison Herren Lee responded by saying that “More evidence is required by regulators to ensure that the proposed steps would protect ordinary investors from the risks presented by leveraged ETFs.”

Read more via the Financial Times.