Fink said the implosion of MF Global is another example of the dangers of leverage, and he’s concerned that leveraged instruments could have the same problem if not managed correctly.
He added he was surprised that leveraged ETFs were approved by regulators, when they have cracked down on leverage in other areas in the wake of the financial crisis.
“This is not just an institutional product,” Fink said. “This is an individual product. We’re the largest player in the ETF market. We want to make sure this market is as clean as possible and so what we’re suggesting is a higher level of disclosure and possibly some form of limitations of as to who can buy structural leveraged instruments.”
The ETF classification system proposed by BlackRock is “arbitrary, anti-competitive and unworkable,” said ProShares CEO Michael Sapir in a statement. “The recommendation may serve BlackRock’s competitive interests, but would not serve investors’ interests and likely result in confusion.” [ProShares Balks at Proposed ETF Classification System]
ProShares has seen net inflows of $7.1 billion year to date through October, according to data from the National Stock Exchange. Leveraged and inverse ETF rival Direxion has gathered $3.6 billion in 2011.