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Reimbursed for trades by TD Investing Direct

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A while ago I got wrong footed by AGQ (2x levereged silver) and ZSL (-2x levereged silver) ETF's. I very nearly got it right by buying ZSL at 44 (a couple of weeks before it raced to 80) just before silver had its recent fall but paniked and sold back to AGQ. This caused me to take a paper loss as I didn't sell. I just had a very interesting phone call from TD Investing Direct who, after asking me several questions decided that I did not have the experience to deal in these levereged products and so have offered to reverse all trades I have made in these securities and refund my account. They are not asking to sign anything and are claiming to offer it as a good will gesture and they claim this will not affect my ability to complain further if I so wished. For the sake of ease I have accepted, but I do wonder what pressure they are trying to avoid, they claim that the FSA has not instructed them to act. Do you believe that they are just doing this for the sake of their customers or is there a more sinister side to this? Either way I think I may get a bottle wine tonight.

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Most likely is TCF = Treating Customers Fairly in regulatory terms. Maybe TD have had problems in the past and are worried about annoying the regulators?

 

Wonder if you will be able to trade leveraged ETF's again with TD ?

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A while ago I got wrong footed by AGQ (2x levereged silver) and ZSL (-2x levereged silver) ETF's. I very nearly got it right by buying ZSL at 44 (a couple of weeks before it raced to 80) just before silver had its recent fall but paniked and sold back to AGQ. This caused me to take a paper loss as I didn't sell. I just had a very interesting phone call from TD Investing Direct who, after asking me several questions decided that I did not have the experience to deal in these levereged products and so have offered to reverse all trades I have made in these securities and refund my account. They are not asking to sign anything and are claiming to offer it as a good will gesture and they claim this will not affect my ability to complain further if I so wished. For the sake of ease I have accepted, but I do wonder what pressure they are trying to avoid, they claim that the FSA has not instructed them to act. Do you believe that they are just doing this for the sake of their customers or is there a more sinister side to this? Either way I think I may get a bottle wine tonight.

 

I think the point is that perhaps they ought to have asked these questions before allowing you to trade leveraged products. The fact that they refunded you without asking suggests some sort of concern on their part about a potential liability arising from a gap in their adherence to FSA regulations.

 

Just a guess.

 

 

http://www.indexuniv...raged-etfs.html

 

"FSA Warns On Leveraged ETFs

 

 

The UK regulator, the Financial Services Authority (FSA), has warned that leveraged exchange-traded funds may be unsuitable for mainstream, retail investors.

 

The warning comes in a new discussion paper, ‘Product Intervention’, in which the FSA sets out its intention to take a much more interventionist approach to the regulation of retail financial services.

 

Its previous approach - ensuring that sales processes are fair and that product disclosure is transparent - has proved insufficient to prevent retail customers from suffering 'severe customer detriment', says the regulator. It now recognises that there are fundamental reasons why financial services markets do not always work well for consumers, the FSA says, and that a new regulatory approach, involving earlier intervention, is therefore warranted.

 

Leveraged ETFs, along with traded life policy investments and some of the more complicated areas of the structured product market, are areas where the FSA sees particular cause for concern, according to the discussion paper.

 

The UK regulator does not propose banning such financial products, but would make it clear that the starting point is that these products are unsuitable for most retail customers. Anyone promoting them would need to provide ‘extensive research and justification’, says the FSA.

 

The FSA’s focus on the risk of leveraged ETFs follows a move in the US early last year by the chief securities market regulator, the Securities and Exchange Commission (SEC), to limit the use of derivatives in exchange-traded funds, notably by funds offering inverse and leveraged exposure.

 

By contrast with the SEC, the UK regulator is warning merely about the risks involved in leveraged exchange-traded products, not those offering simple inverse exposure (minus one times the index return).

 

Both inverse and leveraged ETFs rebalance their exposure daily, leading to a likely divergence over time between a fund’s performance and the equivalent multiple of the underlying index return. The greater the leverage factor involved and the higher the volatility of the underlying index, the larger the potential divergence.

 

Leveraged and inverse ETFs represent only 2% of the European exchange-traded product market by assets under management, although they tend to be amongst the most heavily traded instruments in the sector."

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Thanks for the opinions, maybe I am just to suspicious of a good thing that is freely offered.

 

Wonder if you will be able to trade leveraged ETF's again with TD ?

 

They give a phone based test which can be taken every 28 days, so I could potentially trade again.

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I moved house a few weeks ago and got stuck for 6 weeks on a really rubbish tariff whilst i was switched over to my old supplier. After phoning them, all I had to say was 'you did not explain the implications of the tariff or what options I had when I moved in' and they instantly crumbled and refunded 10% of my combined gas and electric bill. Given my gas bill for 1 month was just under £500 that made a little difference!

 

I think there is a genuine fear about regulatory headlines leading to another rush of mass-claims. Dealing swiftly and proactively with issues on demand will likely be an easier route and demonstrates good faith to the regulators.

 

It also reminds me of when there was that fuel-contamination saga a few years ago when engines got ruined by dodgy petrol. My dad had filled up around the time the bad fuel was in circulation but was pretty sure it was a good couple of weeks after the fuel had been purged. He phoned Tescos to say he didn't think it was related but his car head gasket had blown shortly after filling up and could they just confirm the dates that the fuel was defective. Tescos insisted he speak to the solicitors dealing with claims. My dad said he didn't want to claim, but just wanted to understand the dates - he was pretty sure it was ages afterwards. Tesco insisted he speak to the lawyers. My dad emailed them and a few days later received a letter saying his claim had been unsuccessful. He then emailed back to say he just wanted to know the dates that the fuel had been defective. A week or so later he received a letter saying his appeal had been successful and enclosing a cheque for £1,500.

 

Odd world!

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