The development comes in the wake of attorney Jay Clayton heading the SEC.
In a significant development, the Securities and Exchange Commission (SEC) has approved the trade of quadruple-leveraged exchange-traded funds in the United States.
This indicates a first for such products in the United States.
The request to list ForceShares Daily 4X US Market Futures Long Fund was filed by Intercontinental Exchange Inc. ForceShares Daily 4X US Market Futures Short Fund will be listed under the DOWN.
ETFs which offer three times leverage are already traded in the United States while more reactive products have been limited to listings in Europe.
“We’re excited about it,” said Sam Masucci, chief executive officer of Exchange Traded Managers Group LLC, which distributes the products while stating it is “not going to be for everybody.
“But for those people that are looking for the leveraged exposure to the S&P and they’re not looking to do it by way of a futures product here you have a publicly listed security,” said Masucci.
The approval by regulators come in the wake of difficult time faced by sponsors of such exotic ETFs.
In 2016, the SEC had presented draft rules requiring restrict usage of derivatives, which was seen crimping some fund managers’ ability to keep highly leveraged products on the market.
In March, the SEC ruled against bringing Bitcoin ETFs and ruled against an application by Cameron and Tyler Winklevoss. It however stated it would review that decision.
Significantly, on Tuesday the U.S. Senate voted to confirm the appointment of attorney Jay Clayton as the head of the SEC, a change which could potentially prompt a change in tack by the agency through which investment products come to market.
In an e-mailed statement, Douglas Yones, a top NYSE ETF official, mentioned that hoped the approval “paves the way for us to work with other leveraged product issuers over the rest of the year.”