Leveraged and inverse exchange traded fund provider ProShares on Wednesday lambasted an ETF classification system proposed by BlackRock at a Senate subcommittee hearing.

“We were disappointed when one of the witnesses used today’s hearing as a platform to promote its own agenda,” said Michael Sapir, ProShares chief executive. “The classification system recommended by BlackRock is arbitrary, anticompetitive and unworkable. The recommendation may serve BlackRock’s competitive interests, but would not serve investors’ interests and likely result in confusion.”

Noel Archard, head of U.S. iShares product at BlackRock, was among the individuals who testified at the hearing Wednesday.

Archard said some of the ETFs in the newer generation are more complex, carry greater risks and may not be appropriate for buy-and-hold investors.

“Products which raise such concerns include so-called leveraged and inverse funds, products that are backed principally by derivatives rather than physical holdings,” he said. “These products require a greater deal of disclosure and up-front work with clients for them to understand investment and structural risks and BlackRock believes that they should not be labeled ETFs.”

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