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SEC Is Pushing Back Against New Wave of High-Leverage ETF Plans
The US Securities and Exchange Commission asked leveraged-ETF issuers not to move forward with a new wave of planned funds, using a rare group call Monday to renew its push against increasingly aggressive fund structures.
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At stake is whether a new generation of ETFs — some designed to deliver as much as five times the daily return of an underlying index, for instance — comply with regulatory limits governing fund risk relative to assets.
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The resistance is especially unusual against the backdrop of a more accommodating regulatory tone from the Trump administration. The episode also underscores the delicate balancing act facing governing agencies as they weigh a surge of increasingly provocative product proposals against the need to safeguard market credibility and uphold regulatory guardrails.
The current scrutiny can be traced back to October, when Volatility Shares filed to launch ETFs targeting five times the daily return of some of the market’s most volatile assets.
Several firms followed with similar filings. The SEC issued warning letters in December cautioning against increasingly complex leveraged ETF structures. This year, however, another wave of applications has landed from firms including Leverage Shares, GraniteShares, Direxion, ProShares and Roundhill Investments. It wasn’t immediately clear which issuers or representatives attended Monday’s call.
