12.03.25

SEC Halts High-Leveraged ETF Plans in Warning Over Risks

by: Denitsa Tsekova; Nicola M. White

The U.S. Securities and Exchange Commission (SEC) has issued warning letters to firms including Direxion, ProShares and Tidal, effectively halting plans for high-leverage exchange-traded funds (ETFs) designed to deliver two- or three-times daily returns on stocks, commodities and cryptocurrencies. The SEC cited concerns that these funds’ risk exposures could exceed regulatory limits relative to their assets, directing managers to revise strategies or withdraw applications. The move highlights the regulator’s caution toward highly leveraged products that amplify volatility and may not accurately measure risk against underlying benchmarks. The action marks a rare pause in U.S. fund approvals, which have otherwise favored complex and crypto-linked investment products.

Read the full article on Bloomberg