Betting Big on Leveraged ETFs
Is anyone willing to bet that 3x- or 5x-leveraged ETFs will be approved by the SEC?
After all, there is a prediction market bet available via Polymarket that a Litecoin ETF will get a green light from the regulator by the end of the year. There’s no such wager listed for the glut of leveraged exchange-traded funds recently filed by several issuers … yet. Currently, the odds probably wouldn’t be great. Last week, shortly after Volatility Shares filed for numerous 3x- and 5x-leveraged ETFs, the SEC’s director of the division of investment management, Brian Daly, told Reuters that it’s “unclear whether these ETFs would comply with the Derivatives Rule (Rule 18f-4), which generally limits leverage to 2x.”
