Earlier this summer, Edward Jones announced that it was banning leveraged exchange traded funds (ETFs). Now two more names have jumped into the fray.

LPL Financial said yesterday that they were banning the sale of ETFs that use more than 200% leverage, while Ameriprise said they were banning sales of all leveraged ETFs. Luisa Beltran for Ignites says that the regulatory scrutiny of the products is making the brokers nervous.

These announcements are coming after a warning from FINRA, which reminded firms of their obligation to investors when it comes to leveraged and inverse funds. These ETFs are typically viewed as unsuitable for long-term, buy-and-hold investors. Their providers have been very vocal about who these funds are intended for – tactical traders who are prepared to monitor their portfolios closely.

As we said in the case of Edward Jones, these announcements seem a little self-serving. The institutions that use these funds are known for employing basic strategies, not for their use of sophisticated financial instruments. There are many advisors out there who wouldn’t touch these ETFs, but they’re not making proclamations.

For more stories about leveraged ETFs, visit our long-short category.

Tags: Long-Short ETFs