#What Happened to ProShares' Proposal for Leveraged ETFs?
ProShares recently halted its plans to introduce a series of leveraged exchange-traded funds that were intended to offer three times daily exposure to significant technology stocks and digital assets. This decision came after the Securities and Exchange Commission raised concerns, indicating that ProShares needed to revise its filings or delay the effectiveness of its proposals.
The SEC's Division of Investment Management expressed their apprehension in a letter, questioning whether the fund's filings accurately assessed leverage risk based on the securities or indices they intended to track. Their concerns specifically focused on ETFs seeking more than twice the leveraged exposure, which is substantial in such a volatile market.
In the communication, the SEC outlined that the concepts included various ProShares Daily Target 3x ETFs, which spanned across equities, cryptocurrencies, commodities, and various sectors, including popular assets like Bitcoin, Ethereum, and stocks such as Amazon and Tesla.
Following the SEC's guidance, ProShares made the decision to withdraw the post-effective amendment of its registration statement, effectively shelving these products. The funds that are now abandoned include ProShares Daily Target 3x Bitcoin, ProShares Daily Target 3x Ether, and several others aimed at different individual technology stocks.
ProShares also confirmed that it has chosen not to proceed with the registration of these funds and clarified that no securities had been sold in connection with this initiative. The pause on these leveraged ETFs signals caution in a market that is facing increasing regulatory scrutiny, which retail investors should carefully consider as they strategize their investment portfolios.