Category: 3. Business

By Joseph Adinolfi

A trio of issuers filed with the SEC this month for permission to launch dozens of new leveraged funds, some offering to amplify daily returns of hot stocks like Nvidia by as much as 5 times

Over the past few weeks, at least three ETF issuers sought permission from the SEC to launch new leveraged funds. Some say the prospects push the boundaries of what might be permitted under existing regulations.

Wall Street’s push to launch ever-riskier leveraged exchange-traded funds is picking up steam, as issuers test the boundaries of what is legally permissible in the U.S. with a recent flurry of filings.

Over the past few weeks, at least three ETF issuers – Volatility Shares, ProShares and T-Rex – have sought permission from the Securities and Exchange Commission to launch new leveraged funds. If approved, these products would offer investors the opportunity to magnify daily swings in the Dow Jones Industrial Average DJIA; shares of artificial-intelligence darlings Nvidia Corp. (NVDA) and CoreWeave (CRWV); and cryptocurrencies, including bitcoin (BTCUSD) and XRP, by as much as 5x.

Many of the filings pitched funds that aim to amplify daily moves by 3x. But Volatility Shares has filed for permission to launch at least 21 funds advertising 5x daily swings on a number of individual stocks, cryptocurrencies, stock-market indexes or existing ETFs.

Representatives for Volatility Shares, ProShares and T-Rex all declined to comment on the filings when contacted by MarketWatch.

Since the beginning of October, issuers have filed for permission to launch more than 100 funds targeting 3x or 5x leverage, according to a MarketWatch analysis of securities filings.

Volatility Shares files for 21 5x levered ETFs

      Fund name                  Target                    Issuer        Date of filing 
   5x AMD ETF      Advanced Micro Devices Inc.       Volatility Shares  10/14/2025 
   5x AMZN ETF     Amazon.com Inc.                   Volatility Shares  10/14/2025 
   5x COIN ETF     Coinbase Global Inc.              Volatility Shares  10/14/2025 
   5x CRCL ETF     Circle Internet Group Inc.        Volatility Shares  10/14/2025 
   5x GOOGL ETF    Alphabet Inc. Class A             Volatility Shares  10/14/2025 
   5x MSTR ETF     Strategy Inc.                     Volatility Shares  10/14/2025 
   5x NVDA ETF     Nvidia Corp.                      Volatility Shares  10/14/2025 
   5x PLTR ETF     Palantir Technologies Inc.        Volatility Shares  10/14/2025 
   5x TSLA ETF     Tesla Inc.                        Volatility Shares  10/14/2025 
   5x Bitcoin ETF  Bitcoin                           Volatility Shares  10/14/2025 
   5x Ether ETF    Ethereum                          Volatility Shares  10/14/2025 
   5x Solana ETF   Solana                            Volatility Shares  10/14/2025 
   5x XRP ETF      XRP                               Volatility Shares  10/14/2025 
   5x GDX ETF      VanEck Gold Miners ETF            Volatility Shares  10/21/2025 
   5x GLD ETF      SPDR Gold Shares                  Volatility Shares  10/21/2025 
   5x MAGS ETF     Roundhill Magnificent Seven ETF   Volatility Shares  10/21/2025 
   5x SLV ETF      iShares Silver Trust              Volatility Shares  10/21/2025 
   5x SOXQ ETF     Invesco PHLX Semiconductor ETF    Volatility Shares  10/21/2025 
   5x SPY ETF      SPDR S&P 500 ETF Trust            Volatility Shares  10/16/2025 
   5x QQQ ETF      Invesco QQQ Trust Series I        Volatility Shares  10/16/2025 
   5x IWM ETF      iShares Russell 2000 ETF          Volatility Shares  10/16/2025 
   Source: SEC 

These filings caught the attention of individuals who closely follow the ETF industry. Some questioned whether these products would comply with current SEC regulations or run afoul of the regulator’s restrictions.

That’s because SEC regulations from 2021 include provisions that can effectively limit how much leverage a mutual fund or ETF can achieve using derivatives. The specific rule, known as 18f-4, states that firms must carefully manage how volatile their derivatives holdings might be – inclusive of swaps, futures or written options contracts.

Derivatives holdings are subject to a common risk-management calculation that compares their risk of loss to an underlying benchmark, said Rahul Sen Sharma, president and co-CEO of Indxx, which provides benchmarking services for ETFs that uses derivatives.

“Our understanding of 18f-4 is that it requires a designated reference portfolio to calculate a value at risk amount,” he told MarketWatch. While he called the rule “kind of long and complicated,” he figured it can be satisfied if a benchmark is provided – at least when it comes to 2x single-stock products, which have been approved in the past.

The first single-stock leveraged ETFs to trade in the U.S. launched in 2022, according to data from Morningstar Direct.

Dozens of funds aimed at 3x the daily move in an underlying index were grandfathered in because they launched before the 18f-4 SEC rule was finalized. That includes the ProShares UltraPro QQQ ETF TQQQ, which aims to amplify daily swings in the Nasdaq-100 index NDX. That fund consistently ranks among the most heavily traded by clients of Interactive Brokers Group Inc. (IBKR), according to data shared with MarketWatch.

Of note, in the U.S., no ETF currently trading targets 3x the daily move on an individual stock. A spokesperson for the SEC said the agency isn’t able to respond to many press inquiries due to the ongoing government shutdown.

The higher the targeted leverage, the greater the challenge for getting these funds to pass muster with the SEC, said Dave Nadig, president and head of research at ETF.com and co-author of book titled “A Comprehensive Guide to Exchange-Traded Funds.” However, SEC rules governing derivative-linked volatility could probably be gamed to a certain extent, he said.

Others were more upbeat about the possibility that the SEC could permit the new batch of proposed funds to come to market, including the ones targeting 5x leverage.

A top executive at one ETF issuer, who asked for anonymity because he was not authorized to speak publicly to the press, said he thinks these funds could be allowed under current SEC rules. Ultimately, whether or not they are approved will depend on how deeply opposed the SEC is to allowing these products to come to market, the executive said.

“Remember what happened with spot bitcoin? It wasn’t allowed, everyone filed for it, now it’s huge,” the executive said. In 2024, after a years-long saga, the SEC finally approved ETFs that could hold bitcoin directly.

Booming issuance

Issuance of new ETFs has boomed over the past couple of years as companies gravitated toward increasingly complex products. Funds that use derivatives, either to supercharge daily swings or offer dividend income or downside protection, have proven particularly popular.

Leveraged equity funds are the largest category in the leveraged-fund universe, encompassing 750 funds and $164.37 billion in total assets, according to data from EPFR, an ISI Markets company. The number of existing leveraged equity funds has increased by 40% year to date, and the vast majority of funds in the leveraged-equity category are ETFs.

Firms have also launched 164 leveraged alternative funds, which track cryptocurrencies like bitcoin and commodities like gold. These have accumulated $46 billion in assets, while leveraged bond funds have taken in $7.6 billion across 56 funds, EPFR data showed. These figures include both ETFs and mutual funds.

In the U.S., leveraged funds can be purchased on Robinhood Markets Inc. (HOOD) and other brokerages popular with individual investors, making them particularly popular with amateur speculators, experts said. Professional investors can trade them as well.

European regulators, so far, have demonstrated a higher tolerance than their U.S. counterparts for allowing leveraged products that everyday investors can tap. While some products tied to individual stocks have proven popular, one such fund went bust earlier this month, offering a lesson to investors.

On Oct. 6, the GraniteShares 3x Short AMD Daily ETP was terminated by its issuer after shares of AMD rose by more than 33% intraday, driving the value of the exchange-traded product to zero. This fund was what is known as an inverse fund. Seen as a sibling to leveraged funds, inverse funds aim to profit when the targeted asset or index declines in value. A 33% gain for a given stock would be large enough to wipe out a 3x inverse fund.

In a statement shared with MarketWatch, GraniteShares described the liquidation as a “standard outcome.”

“The closure of a 3x long or short ETF following an extreme price move is a standard outcome in both U.K. and U.S. markets. In this instance, a 33%+ intraday move in AMD triggered the predefined mechanism that results in a 100% loss for a 3x short position, exactly how the product is designed to operate,” a representative for GraniteShares said in a written statement to MarketWatch. Investors who owned the fund ahead of the wipeout lost their entire investment.

Liquidations like that one could follow in the U.S. if any or all of the current crop of filings for single-stock leveraged funds are approved, according to Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence.

Balchunas crunched the numbers and found 350 instances over the past five years where one of 66 stocks included in a filing for a 3x leveraged product swung by 33% or more in a single session. Such a move could be large enough to wipe out a fund aiming to amplify a daily move by 3x in either direction. A drop of just 20% would be enough to push a fund targeting 5x leverage on a single stock to liquidate.

Despite these risks, ETF.com’s Nadig said products targeting 5x leverage on stocks like Nvidia would probably prove popular with investors.

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Changpeng Zhao, founder of the world’s largest cryptocurrency exchange Binance, has been pardoned by US President Donald Trump.

Zhao, also known as “CZ”, was sentenced to four months in prison in April 2024 after pleading guilty to violating US money laundering laws.

Binance was ordered to pay $4.3bn (£3.4bn) after a US investigation found it helped users bypass sanctions.

White House Press Secretary Karoline Leavitt called Zhao’s prosecution under the Biden administration part of a “war on cryptocurrency”.

She claimed Zhao had been targeted “despite no allegations of fraud or identifiable victim” and said prosecutors’ efforts to seek a three-year prison sentence had “severely damaged the United States’ reputation”.

“The Biden Administration’s war on crypto is over,” she said.

The move to pardon Zhao comes amid the Trump administration’s adoption of a more friendly stance towards cryptocurrency than his predecessors.

The President has vowed to make the US the “crypto capital” of the world and made his own mark in the digital currency landscape by releasing his own coin shortly ahead of his inauguration in January.

Since then, he has sought to establish a national cryptocurrency reserve and pushed for making it easier for Americans to use retirement savings to invest in them.

The Wall Street Journal previously reported representatives of the Trump family – which has its own crypto firm World Liberty Financial – had recently held talks with Binance.

The company has spent nearly a year pursuing a pardon for its former boss, who completed his four month prison sentence in September 2024, the WSJ reported on Thursday.

Binance has been approached for comment.

The exchange, which is registered in the Cayman Islands, remains the world’s most popular platform for buying and selling cryptocurrencies and other digital assets.

Zhao stepped down from the company in November 2023.

He wrote in a post on X it was “not easy to let go emotionally” but “the right thing to do”.

“I made mistakes, and I must take responsibility,” he said.

US officials at the time accused Binance and Zhao of “wilful violations” of its laws – saying they had threatened the US financial system and national security.

“Binance turned a blind eye to its legal obligations in the pursuit of profit,” said then-Treasury Secretary Janet Yellen.

“Its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”

That’s why today, we’re announcing Future Ready 2030—a $2.5 billion commitment to expand access to education and skills training and help prepare at least 50 million people for the future of work. This will benefit Amazon employees, students, and many others, because we believe that in a rapidly changing economy, people deserve the tools to adapt, build a career, and thrive.

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Apple has lost a landmark UK class action antitrust lawsuit over claims it levies “excessive and unfair” charges on software downloaded from its App Store, in the latest legal blow to the US tech giant.

The Competition Appeal Tribunal ruled on Thursday that the Silicon Valley-based group abused a dominant position to charge developers commissions of as much as 30 per cent on purchases.

The claimants said 36mn consumers would be entitled to damages of about £1.5bn. Apple said it would appeal.

The tribunal found that Apple has “near absolute market power” in the markets for iOS app distribution and in-app payments.

Apple “is abusing its dominant position by charging excessive and unfair prices” to developers, it said in the decision.

The tech group said the ruling took a “flawed view” of the mobile apps market, arguing iPhones face “vigorous competition”.

“This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments,” Apple said.

The tribunal’s decision is the latest in a series of legal and regulatory challenges facing Apple’s lucrative services business, which is expected to generate more than $100bn in revenues for the first time this year.

The decision comes just a day after the UK’s antitrust agency said it would impose strict new rules on how Apple and Google run their mobile platforms under Britain’s new digital competition law.

Apple is also fighting several aspects of the EU’s Digital Markets Act, which has forced the iPhone maker to make changes to its App Store.

It also faces huge pressure over the App Store in the US. Last year, the US Department of Justice filed a landmark antitrust case against Apple over what it alleges is a smartphone monopoly.

The CAT ruling is a crucial victory for class action claimants following a series of recent disappointments.

A wave of lawsuits have been launched — many of them against technology companies — under legislation drawn up a decade ago allowing mass actions over alleged breaches of competition law.

But the cases have been bogged down by protracted legal arguments over process, and payouts so far have largely been seen as disappointing for claimants.

The case against Apple — led by “class representative” Rachael Kent, a lecturer at King’s College London — was the first such case against a Big Tech group to go to trial before the CAT. Apple’s chief financial officer Kevan Parekh testified this year.

Kent said in a statement following the ruling: “Every in-app purchase, subscription and paid download was inflated by Apple’s anti-competitive practices.”

She added: “This is a landmark victory — not only for App Store users, but for anyone who has ever felt powerless against a global tech giant.”

In a 396-page ruling on Thursday, the CAT said “the process for resolving any questions relating to the calculation” of damages would be determined at a subsequent hearing, as soon as next month.

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Tesla is recalling more than 63,000 Cybertrucks in the U.S. because the front lights are too bright, which may cause a distraction to other drivers and increase the risk of a collision.

The National Highway Traffic Safety Administration said that the recall includes certain Cybertrucks with a model year between 2024 and 2026. The vehicles were made between Nov. 13, 2023, and Oct. 11, 2025, with operating software versions prior to 2025.38.3.

The agency said that Tesla is not aware of any collisions, injuries, or fatalities related to the condition.

Tesla, which is run by billionaire Elon Musk, is issuing a free software update to correct the issue.

Earlier this month, federal regulators opened yet another investigation into Tesla’s self-driving feature after dozens of incidents in which the cars ran red lights or drove on the wrong side of the road, sometimes crashing into other vehicles and causing injuries.

The National Highway Traffic Safety Administration said in a filing that it was looking into 58 incidents in which Teslas reportedly violated traffic safety laws while using the company’s so-called Full Self-Driving mode, leading to more than a dozen crashes and fires and nearly two dozen injuries. The new probe adds to several other open investigations into Tesla technology that could upend Musk’s plans to turn millions of his cars already on the road into completely driverless vehicles with a over-the-air update to their software.

In March U.S. safety regulators recalled virtually all Cybertrucks on the road. The NHTSA’s recall, which covered more than 46,000 Cybertrucks, warned that an exterior panel that runs along the left and right side of the windshield can detach while driving, creating a dangerous road hazard for other drivers, increasing the risk of a crash.

On Wednesday Tesla reported a fourth straight decline in quarterly profit, even as sales rose. The automaker reported third-quarter earnings plunged 37% to $1.4 billion, or 39 cents a share, from $2.2 billion, or 62 cents a share, a year earlier. That marked the fourth quarter in a row that profit dropped. And even the revenue rise, a welcome relief from a sales plunge earlier in the year due to anti-Musk boycotts, came with a significant caveat: Customers rushed to take advantage of a $7,500 federal EV tax credit before it expired on Oct. 1, possibly stealing sales from the current quarter.

Car companies across Europe and Japan including Volvo, Volkswagen, Honda and Nissan have warned that the battle between the Netherlands and China over control of the chipmaker Nexperia could hit production at factories.

Last week’s decision by the Dutch government to take control of Nexperia – a Chinese-owned chipmaker based in the Netherlands – has sent shock waves across the auto industry, which is already facing potential shortages of products such as magnets amid China’s latest restrictions on rare earths exports.

The Hague said at the time it was taking control of Nexperia to safeguard Europe’s supply of semiconductors and that it had invoked a cold-war era law to take effective control of the chipmaker following concerns raised by the US about the Chinese owner, Wingtech.

That decision caused an immediate rift with Beijing, which banned all exports from the chipmaker, escalating the already tense relations between China and the US before a potential meeting between Donald Trump and Xi Jinping next week in Korea.

The Japan Automobile Manufacturers Association, whose members include Nissan, Toyota, Honda and Mazda, said on Thursday it had received a warning from Nexperia that chips could now be in short supply, potentially holding up manufacturing.

“The chips manufactured by the affected manufacturers are important parts used in electronic control units, etc, and we recognise that this incident will have a serious impact on the global production of our member companies,” the association said. “We hope that the countries involved will come to a prompt and practical solution.”

The German car trade association the VDA has also warned of serious consequences for an industry already battling against stiff competition from Chinese EV manufacturers.

Its president, Hildegard Müller, said: “The situation could soon lead to significant production restrictions – or even a stop in production – if the interruption of Nexperia chip deliveries cannot be resolved in the short term.”

She revealed VDA members and suppliers had received a notice on 10 October from Nexperia “describing a sequence of events that has led the company to no longer be able to fully ensure the supply of its chips to the automotive supply chain”.

Such is the urgency that the VDA had a meeting with the German economy minister last night pushing the federal government and the European Commission for “quick and pragmatic solutions”.

In Japan, a Nissan spokesperson said: “We are assessing the situation and will take appropriate measures as needed.”

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Nexperia produces large volumes of semiconductors in the Netherlands, which are widely used in the automotive industry and consumer electronics. The majority are packaged in China, from where they are sold back into global industries.

The chief executive of Volvo Cars, Håkan Samuelsson, said the Swedish group, owned by China’s Geely, was not seeing any immediate problems itself, but said he expected rivals to be hit.

“I think there will be some factories shut down,” he told the Financial Times on Thursday. “You always have to be a bit smarter than the rest of the pack so you are not the one that has to shut down the factory.”

The UK industry body the Society of Motor Manufacturers and Traders said chip supply problems were the last thing the industry needed.

“While the sector has made efforts to diversify its supply chains, if not resolved quickly this issue has the potential to severely disrupt vehicle production and market supply.” It said.

“SMMT is actively monitoring the situation and is in contact with members and government to understand the scale of any impact and measures that might be taken to mitigate it.”

Germany’s Volkswagen warned on Wednesday that its car production could also be hit. VW, Europe’s biggest carmaker, confirmed that some Nexperia components are used in its vehicles but said production was currently unaffected. “However, given the dynamic nature of the situation, an impact on production cannot be ruled out in the short term,” added the company, whose 10 brands include Audi, Seat and Skoda.

The German economy ministry said on Wednesday it would have a call with car industry bosses.

Quality analytics has long been seen as key to better understanding benefits utilization and developing strategies that drive up engagement, but getting the analytics hasn’t been easy.

Whether manually crunching data, waiting for partners to provide reports or working with dashboards, extracting and analyzing data can be arduous and time-consuming.

Fortunately, AI agents such as ChatGPT and Len AI, Marsh McLennan’s proprietary AI technology, now allow datasets to be analyzed using natural language so that benefits data can be easily reviewed to uncover valuable insights. Not surprisingly, 50% of employers are already using AI for benefits purposes, and a further 48% plan to use it within the next one to three years. Advanced and predictive analytics, along with personalization, are the main drivers of this trend.^[1]

On a practical level, the reduction in administrative burdens is significant. For example, HR teams can see benefits uptake and engagement rates and identify any utilization issues that could be impacting budgets. This frees up time for HR to focus on more strategic initiatives such as understanding how preventative benefits are impacting claims.

Using AI for data-driven decision making

Predictive analytics presents a compelling use case for AI, especially in the health and well-being arena. For example, by predicting how many people are likely to fall sick within the year, benefits strategies can be optimized to account for medical inflation and budget considerations in the context of ever challenging resource constrained environment. 

This requires building scenarios and simulating the likely outcome of different benefit strategies. For example, if you anticipate a high number of musculoskeletal (MSK) claims, how many are likely to result in longer-term rehabilitation and how might uptake of a preventative benefit change that?

It also requires distinguishing between society-wide issues and those specific to your organization. At Mercer Marsh Benefits (MMB) we can overlay organizational data with huge data sets to help clients identify pockets within their organization that are bucking broader trends.

An even deeper dive can be carried out to identify which clinical pathways, and even healthcare providers, are generating the most successful outcomes. This allows employers to better educate employees on the most effective pathway, hospital, public program or benefit for their needs.

This level of personalization is welcomed by employees, with over two thirds saying they would share their health information with a confidential third party to receive tailored benefits information, or personalized health recommendations.^[2]

Hyper-personalization of benefits

Of course, no benefit strategy will deliver optimal results if employees are not engaged and aware of their options. AI has a meaningful role to play in increasing utilization by replacing one-size-fits-all communications with compelling content automatically generated and tailored to different employee demographics.

Generative AI chat assistants are now being used by benefits platforms like Darwin with the AI Chat Assistant, to allow employees to get answers to benefits questions such as “Can I add my wife to my dental policy?”. Allowing employees to easily access information and execute tasks not only saves them time and boosts engagement but improves the user experience.

On another level, personalization helps employees discover benefits they didn’t know existed or hadn’t considered. For example, individuals who are looking to exercise more and improve their fitness levels can be signposted towards benefits that can help them achieve these goals, such as gym memberships and wellness programs.

To give employees confidence to share relevant, personal data, it’s important to educate them on the ways data is anonymized or de-identified to protect their privacy. This data is often used to build personas to improve the relevance of what is showcased to employees thereby increasing uptake.

Insights generated by any analytics application are only as good as the data that underlies the analysis. Data integrity is critical as is the governance and processes that sit around it. 

Enhanced efficiency and benefits management

Increasing benefits choice used to mean increasing benefits administration, but AI can ingest data more effectively, automate routine tasks, carry out compliance monitoring and reduce human error.

For example, if you had a reimbursement fund to allow people to claim for well-being activities, AI can not only check the receipt to ensure it’s not a duplicate claim, but check the provider actually exists, that the service provided is covered, and that the employee hasn’t gone over their allocation.

Similarly, it can be used to automatically close payroll, enroll new joiners, and run other benefits processes, to significantly reduce administrative overheads. This gives already stretched HR teams more time to focus on more strategic initiatives.

Building the right AI foundation

Any AI initiative is only as good as the underlying dataset and building the right AI foundation to centralize and connect that data is critical to success. 88% of employers who centralized their benefits software in this way say they can respond quickly to change, with 73% of those saying they are on track to achieve their employee engagement targets.^[3]

AI not only has the potential to improve benefits insights and administration for employees and employers, but it also has the potential to transform the employee experience to create a healthier, more satisfied workforce. As such, half of employers are currently using AI to forecast future benefits needs based on workforce trends, and 58% are personalizing benefit recommendations and communications based on AI insights with a further 33% planning to do so by 2026. This shows a significant move towards employers increasingly leveraging data not only for tracking and forecasting, but also for personalization and improving wellbeing.^[4]

Key take-aways for employers

1. Artificial intelligence is transforming how employee benefits are managed, making data analysis and engagement more efficient and effective. Employers who are investing in, and leveraging, AI tools can quickly process complex benefits data to identify trends and opportunities that were previously difficult to uncover.
2. Predictive analytics enables smarter health and well-being strategies to better meet employee needs. Organizations that are using predictive analytics to design targeted wellness initiatives are better able to anticipate potential health risks and tailor programs that proactively support employee wellness.
3. Hyper-personalized communication enhances employee understanding and utilization of benefits. Employers who make use of AI to deliver personalized communication and relevant benefits information to each employee, benefit from increased engagement and ensure that employees make the most of their available options.
4. Automating administrative tasks with AI improves operational efficiency and employee satisfaction. By doing so, HR Leaders can reduce manual workloads and free up their HR teams to focus on strategic initiatives while providing employees with faster, more accurate service.