“All the big discount brokers are trying to find out,” said Scott Burns, director of ETF research atMorningstar Inc. “The challenge is (they want to be the middleman for all investor business), but they`re trying to figure out what their responsibility is.” Whenever the investor wishes to make an after-the-fact exchange with a loan-financed ETF or an ETF or ETN, he receives a warning message reminding him that he has signed the agreement. I have a pension account at Fidelity and my desired portfolio breakdown covers 5% of the raw materials. I am aware that commodity funds are risky and unpredictable, but from what I cannot say in an unusual way, to invest a small part in them or something like precious metals. When a Fidelity customer first orders a foreign course or an ETF or ETN for the first time, they must accept the terms of a “designated investment agreement” that requires them to indicate their risk profile. Only investors who describe their objective as “aggressive” can negotiate with reverse ETFs and ETNs. The Financial Industry Regulatory Authority (FINRA) and other regulators began warnings about the sale of these investments in 2009, concerned that brokers are selling them to clients with a conservative investment profile. Investors must also represent or accept that they: demanding and experienced, can afford to lose some or all of their investments, will independently analyze the risks, and will not rely on Fidelity for advice, information or oversight of such investments now – or at all. On the one hand, their commercial proposal is based on the supply of products to DIY investors. However, with increasing control over complex products such as exchange-traded notes and exchange-traded funds (ETFs), these companies are at risk of being sued if they do not deviate to ensure that customers know what they are buying. Each partner of the foundation makes available to the general partner a list that identifies “disqualified persons” and designated investments in relation to that foundation partner. Schwab, which has about 8.6 million active brokerage accounts, said it is checking whether a warning should be added if a client is preparing to trade with an ETN.
Discount broker Charles Schwab Corp already has an alert system that warns of the risks of Leveragedand`s reverse ETFs before a customer enters into trades. Designated assets may, by their nature, be illiquid, limited to resale or without easily identifiable market value. But neither TD Ameritrade nor Schwab are thinking about the broader approach Fidelity Investments has already taken. ETFs are designed to increase short-term returns through the use of debt and derivatives and are considered more suited to professional traders than long-term retail investors or high-risk investment profiles.