The move follows the sudden plunge in an exchange-traded note called
"It is under review, primarily because of the risk we saw in things like the TVIX. No one knew that those kind of things were going to happen," said
The warning would be similar to one that pops up when investors trade options related to volatility, which are more complex than stocks.
The note, which pops up at the final verification stage of a trade, will serve as "a last warning to say, 'Hey, make sure you know what you are doing. If not, call us and we will explain to you,'" Frederick said.
Schwab's review and consideration of a warning for investors is significant because it comes at a moment after federal and state regulators have zeroed in on volatile trading and other activity involving exchange-traded notes.
REGULATORS CIRCLING ETNs
The price of TVIX dropped about 60 percent in just two days last week on news that
MAKING RISKS CLEAR
Another major online brokerage
Fidelity also does not make leveraged and inverse ETNs and ETFs easily accessible when investors use its "ETF Screener."
A spokesperson for discount broker
A representative from
Exchange-traded notes have been attracting higher investment inflows alongside their exchange-traded-fund cousins. But experts caution that investors need to educate themselves before trading these exchange-traded products, or ETPs.
ETNs have brought in
"Even as a full-time trader, this is a product that is very hard to understand. You type in TVIX and all you get is that the profit is two to three times the volatility index, so people are thinking 'Oh yeah, this is great.' The problem is, these ETNs are designed to fail. They are broken products," said
"Unfortunately, I traded TVIX during the plunge last week, and lost a couple thousand in a short time frame," Lissette said.
Angry investors, some who have lost in the "six-digit figures" trading TVIX are gearing up for a lawsuit against
Some are also questioning the timing of the announcement on re-issuing shares, which came just a couple hours after a 30 percent plunge in TVIX on
The law firm said on its website that it "has been retained by a client who suffered a six-figure loss in TVIX on
Some large full-service brokerage firms already restrict their brokers from selling exchange-traded notes. For example,
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