SEC: You’ll Have To Keep Losing Money The Old-Fashioned, Slightly Slower Way

A quadruple-levered ETF may be too beautiful even for Donald Trump’s America.
Wait, what? (Sullivan & Cromwell)

Wait, what? (Sullivan & Cromwell)

It certainly looked like the SEC’s staff had gotten the message being loudly telegraphed from the White House: Anything goes. A quadruple-levered S&P 500 exchange-traded fund unconstrained by mutual fund regulations with the added efficiency of no independent board of directors? Why not? How else are you going to turn the tragicomedy at 1600 Pennsylvania Avenue from a 2% drop into an 8% loss? Not everyone can get a margin account, you know.

Unfortunately, new SEC chief Jay Clayton is giving President-for-now Trump ample reason for second thoughts by living up to his promise to do his job. So for now, you’ll just have to settle for losing money three times as fast as the market generally allows.

The commission’s decision means the earlier approval—given by the SEC’s staff, not the politically appointed commissioners—has been put on hold and doesn’t allow the ForceShares Daily 4X US Market Futures Long Fund and Short Fund to begin trading, the people said…. The ForceShares quadruple-leveraged funds would be the first to move beyond triple leverage….

The review requires the SEC to consider a new round of comments from the public, which means the application may get more notice this time from competing ETF sponsors as well as some of the consumer groups and Wall Street watchdogs that typically weigh in about new, complex products.

Quadruple-Levered ETF? SEC Hits Pause on Its Approval of an Exotic Investment [WSJ]
Wall Street sells off as investors fret about Trump [Reuters]