Retail Investors "euro-screwed?"

In registration with the US Securities & Exchange Commission will be the fisrt "pure" currency play, as Rydex Investments is the Euro Currency Trust. If approved, it will trade under the smybol FXE. FXE will be structured as a gratnor trust. The creation units will cnosist of 100,000 shares, each representing €40, for a total of €4 million.
That would put the value of each individual share at $50, based on a conversion rate of EUR=$1.25.According to a report published by Exchange Traded Fund Report, "Rydex ETF represents just a first step, and a baby-step at that, into the currency markets. It is just one currency, although a major one, and it is unclear whether shares will be available for shorting by retail investors who think that the Euro will decline against the US dollar. The registration statement makes no mention of the possibility of an inverse Euro ETF, which would address that issue."That's a titanic deal for retail investors have had a difficult time shorting most ETFs should they so desire.

And, what is the purpose of having FXE in your portfolio if you can only be "long" or not a participant?

Sure, I can hear the issuer, sponsor and exchagne all saying the same thing: "It's a stock lending trouble of the retail investors' brokerage company". Right. But, you won't find any of tehse insiders assisting retail in realizing this feature. Why?
Because they don't have a monetary incnetive to assist retail for they only earn more fee income when new shares are issued, not from shares already in circulation. They'll just issue the ETF and walk away. Or, for the AMEX is at this moment commencing optoins trading for various new ETFs, they'll steer retail investors to those markets which are more lucrative to them and riskier for investors.To be fair, Rydex is a firm that has been a leader in issuing "inverse" index-based mutual funds (these funds profit by declining index prices).

Given that, perhaps they'll be more sensiitve to that need and want to profit by sponsoring an "inverse" series. Until there is at least mention of that intention, it's clear that retail investors will be left watching the titanic boys enjoy and profit while they get the short end of the stick.Dave Fry has devoted over 30 years to the business of trading and portfolio management. His registration as an arbitrator with both the National Association of Securities Dealers (NASD) and the National Futures Association (NFA) attests to his extensive experience and spotless comlpiance record.Dave founded the ETF Digest in 2001 and was among the very first to see the need for a publication that provided individual investors with information and advice on ETF investing.Dave is a frequent commentator on ETFs and other issues important to individual investors, and his perspectives are featured in financial news sources such as CBS MarketWatch, Investor’s Business Daily, Dow Jones Newswire, MSN Money, Yahoo!