© Reuters. Chairman Clayton participates in a U.S Securities and Alternate Fee open assembly to suggest altering its definition of an “accredited investor” in Washington
By Katanga Johnson
WASHINGTON (Reuters) – The pinnacle of the U.S. Securities and Alternate Fee (SEC) on Thursday mentioned he’s frightened concerning the dangers to retail traders who’re more and more making short-term bets by way of low-cost buying and selling platforms reasonably than sticking to long-term investments.
“We’re seeing vital inflows from retail traders who conduct extra buying and selling than investing,” Jay Clayton mentioned in a Thursday interview on CNBC’s “Squawk Field.”
The rise of recent, low-cost, easy-to-use buying and selling apps mixed with ultra-low rates of interest has unleashed a flood of retail cash into shares from traders trying to money in available on the market rally. That cash has typically flowed into extremely dangerous trades, together with shares which have filed for chapter.
Robinhood Markets Inc got here beneath https://uk.reuters.com/article/us-robinhood-options/robinhood-details-possible-changes-to-options-offering-after-suicide-by-customer-idUKKBN23Q38Q criticism in June when a 20-year-old buyer took his personal life after believing he incurred a big loss utilizing the free buying and selling app. The agency has since expanded its academic content material for choices buying and selling.
“I encourage individuals to coach themselves, however short-term buying and selling is extra dangerous than long-term investing and I do fear about this threat traders take,” Clayton advised CNBC.
He additionally defended a latest company proposal to considerably elevate the reporting threshold for big institutional funding managers after critics mentioned it could scale back market transparency.
Final month, the SEC proposed adjusting Type 13F, a quarterly report hedge funds submit about their funding actions and holdings. The measure would seize exercise of hedge funds that maintain $3.5 billion in property, up from the present $100 million threshold drawn up 4 a long time in the past.
“The aim of the shape is for regulators to handle massive positions within the market and the present threshold is clearly not the appropriate quantity,” mentioned Clayton.
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