“It’s unusual for them to come out and say all of a sudden that they’re going to review something that was approved,” Joe Saluzzi, a principal at Themis Trading, told CNBC. “I think it was the public reaction to the approval. Everyone was like, ‘Are you kidding me?’ The SEC is saying, ‘let’s put this out to comment.'”
Themis has been vocal in its opposition to the funds on the grounds that they add risk to the market and could give rise to other products that use even more leverage.
“Hopefully, people will comment,” Saluzzi said. “It’s a good thing that they stopped it. You can bet there were probably a dozen more in the queue ready to go.”
The ForceShares application has come under fire for other reasons, including regulatory disclosures that the managers of the fund have little experience and have a small staff for operating complicated funds. Representatives of the company could not be reached for comment.
Leveraged ETFs are not unusual, with some 273 in the market that offer two and three times the moves of various indexes and asset classes, according to XTF data cited by the Journal.
The best performer of the past 12 months, in fact, has been the Direxion Daily Semiconductor Bull 3X Shares, which provides three times the gains of the semiconductor sector and is up 328 percent.