The New York Stock Exchange has proposed five new applications for the registration of exchange-traded index funds (ETFs) for consideration by the Securities and Exchange Commission (SEC). They are all tied to the bitcoin course and include so-called marginal and inverse ETFs. This is reported by Reuters.
The proposed funds from Direxion Asset Management LLC have a higher level of risk compared to standard futures and other derivatives, which are currently being considered by the SEC for registration, and constitute a short-term investment.
These include three "bullish" (margin) funds - Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares and Direxion Daily Bitcoin 2X Bull Shares, as well as two bearish (inverse) funds - Direxion Daily Bitcoin 1X Bear Shares and Direxion Daily Bitcoin 2X Bear Shares).
It is assumed that within the presented funds, a 1% increase in the price of bitcoin will bring from 1.25% to 2% of income to investors investing in bull ETFs. Accordingly, in this scenario, investors of inverse ETFs will lose 1-2% of the invested funds.
If the SEC approves this initiative, new ETFs will appear on the secondary market of NYSE Arca. In this case, the data for the calculations will be taken from the futures market, previously launched by CBOE and CME.
It is also assumed that in the event of increased volatility, the NYSE will suspend trading.
Previously, the SEC rejected or refused to consider applications for registration of bitcoin-ETF, referring to the underdevelopment of the underlying asset market. There were also cases when companies themselves withdrew their applications. However, according to analysts, with the launch of futures, the situation can drastically change.
In December 2017, the Chicago Options Exchange submitted to the SEC applications for rule changes, allowing in the future to launch six ETFs based on bitcoin futures.
