The new U.S. wealth-management giant, Morgan Stanley Smith Barney, has announced that its brokers will no longer be allowed to pitch leveraged and inverse exchange-traded funds to many of their clients.

The firm said that, in response to concerns raised by regulators about
these securities, it has decided that solicited purchases of leveraged, inverse, and leveraged inverse ETFs will not be permitted in traditional brokerage accounts. Unsolicited purchases in these accounts will be permitted only subject to enhanced oversight and review.

Additionally, these securities won’t be bought by accounts managed by its advisors, and the firm’s advisors have been encouraged to review
existing positions in these securities with clients “to emphasize their unique characteristics and risks,” it said.

In Canada, the investor advocacy group FAIR Canada raised concerns about these products earlier this year. It called on regulators to require improved disclosure about the risks of holding the funds for the long-term, among other things.