SEC pushes back on high-leverage ETF plans tied to crypto and tech stocks
The SEC is forcing revisions to high-leverage ETF filings, including those from Direxion, over Rule 18f-4 compliance.Summary
The Securities and Exchange Commission (SEC) has requested revisions to several proposed Exchange-Traded Fund (ETF) filings that sought to implement 3x and 5x leverage ratios. This action is driven by the SEC's enforcement of Rule 18f-4, which regulates the use of derivatives by registered investment companies. Rule 18f-4 mandates that funds must have risk management programs and adhere to value-at-risk limits for leveraged products, generally capping leverage unless specific conditions are met. Direxion, a known issuer of leveraged funds, is among the firms affected, as their proposed ETFs included exposure to volatile assets like Bitcoin, Ethereum, and technology stocks. The SEC's scrutiny ensures that these highly leveraged proposals meet current regulatory compliance standards regarding derivatives and leverage.
(Source：Crypto Briefing)