The stock market's multi-day sell-off two weeks ago reignited Jim Cramer's battle against the risky, volatility-related exchange-traded products that were responsible for the brutal decline.
"I'm calling on Congress to investigate these instruments," the host of CNBC's "Mad Money" said on Monday. "I'm calling for the SEC's enforcement arm to look into whether there's culpability and manipulation, while the corporate finance department of the SEC should re-examine the reasoning behind allowing exactly these kinds of products ... to be in the first place."
These products allow investors to effectively bet on the CBOE Volatility Index, often referred to as the VIX or the market's "fear gauge," which measures expectations of near-term volatility as conveyed by the S&P 500's option prices.
When volatility is low, the returns on these products — often exchange-traded funds (ETFs) or exchange-traded notes (ETNs) — are bountiful. But when the VIX spikes, owners of these products become forced to shed other positions to compensate, sending stocks reeling.
Cramer has railed against these products for years. On Monday, he weighed the consequences of getting rid of them for good.
"What would really be lost? OK, some fees. Maybe a few strategies that failed," he said. "What will be gained? How about this. How about a restoration of the integrity of the system, a system that's been challenged, yet again, by instruments that should never have been created."