(Recasts with Reuters sourcing; adds details on products and
background; adds byline; adds cities to dateline)
By Sarah N. Lynch and Trevor Hunnicutt
WASHINGTON/NEW YORK May 16 The U.S. Securities
and Exchange Commission is putting on hold a recent decision to
approve an exchange-traded fund that promises four times the
daily price moves of S&P 500 futures contracts, according to
people familiar with the matter.
The full commission plans to review the initial decision by
staff members earlier this month to allow what would have been
the first quadruple-leveraged ETFs to come to market, the people
In most circumstances, a decision by the SEC staff stands as
final, but in some cases the commission chooses to review the
It was not immediately clear what issues were raised that
sparked this review. Leveraged ETFs, which are risky
investments, have been the subject of regulatory scrutiny
The SEC and the exchange declined to comment and the
product's distributor could not immediately be reached.
This decision concerns two potential products: ForceShares
Daily 4X US Market Futures Long Fund, which would have listed
under the ticker UP, and ForceShares Daily 4X US Market Futures
Short Fund, with the ticker DOWN.
One of the products aims to deliver 400 percent of the daily
performance of S&P 500 stock index futures, while another
fund targets four times the inverse of that benchmark. That
means a fund could go up 8 percent on a day the index it tracks
falls by 2 percent.
ETFs offering three times leverage already trade in the
United States, but more reactive products have been limited to
listing in Europe.
The request to list was filed by Intercontinental Exchange
Inc's NYSE Arca exchange.
The commissioners could reverse or uphold the initial staff
decision pending a more complete review, people familiar with
the matter said. The Wall Street Journal earlier reported the
SEC's decision to reconsider its approval of the product.
(Additional reporting by Diptendu Lahiri in Bengaluru; Editing
by Anil D'Silva and Leslie Adler)