With President-elect Donald Trump being sworn in on Friday, the exchange traded fund industry, especially the leveraged and inverse segment, could enjoy more favorable treatment as many anticipate the new administration could cut back on regulation and even roll back financial industry reforms.
“There is a lot of discussion about how the new administration may weaken or even reverse many of the reforms that the commission and our fellow financial regulators have implemented since the financial crisis,” Mary Jo White, the outgoing head of the Securities and Exchange Commission, said in what is likely her last speech as head of the agency. “That is a concern that I very much share.”
White will step down when Trump takes office Friday, reports Renae Merle for the Washington Post.
Trump has already tapped Wall Street lawyer Jay Clayton to replace White at the top of the SEC, which immediately drew criticism from Democrats and progressive groups, who pointed to Clayton’s history of representing some of the biggest names on Wall Street, including Goldman Sachs, and helping them weather regulatory scrutiny.
With a more anti-regulation administration coming in, talks of a likely limitation on leveraged and inverse exchange traded funds may not pan out.
ETFs that utilize derivative financial tools to achieve their intended strategies have drawn greater scrutiny from regulators. However, the investment vehicles have been working as intended for more sophisticated investors whom understand the tools.