The Securities and Exchange Commission is reconsidering its initial approval of the first-of-its-kind, quadruple-leveraged exchange traded funds designed to provide four times the daily price moves of the S&P 500.
The commission has decided to put on hold and doesn’t allow for the previously proposed ForceShares Daily 4X US Market Futures Long Fund, under the ticker UP, and ForceShares Daily 4X US Market Futures Short Fund, under the ticker DOWN, to begin trading, the Wall Street Journal reports.
The SEC originally approved both the UP and DOWN 4x ETFs, stating that the funds met regulator’s requirements and were approved for listing.
The green-light for the 4x funds came at a difficult juncture for sponsors of more exotic derivatives-based ETFs. The SEC presented draft rules last year that would have restricted the use of derivatives, which was interpreted as a way to diminish fund managers’ ability to keep highly leveraged products, notably 3x ETFs, on the market.