00:00A corner of the ETF market is drawing regulatory scrutiny and is pushing for still shorter term speculation.
00:06Defines ETFs, submitting paperwork to the SEC for a series of leveraged funds, okay, that would seek to double the
00:11moves of some individual stocks, okay, over periods measured in just hours rather than days.
00:17Isabel Lee joins us now for more.
00:19So we're thinking like over a two-hour period, this ETF would give you two or three times, two times,
00:24the exposure of that stock's move?
00:26Yes, so it's not anymore a daily view, it's an intraday view.
00:31And if approved, this ETF will rebalance at least six times.
00:34So, you know, if you think that NVIDIA will say something at like a certain time, then you can have
00:39a position before, a position after.
00:41And I say NVIDIA because the proposed filings of defiance include, of course, the big tech names from NVIDIA to
00:46Tesla to Palantir, you name it.
00:48And then you said, oof, I also said oof in the beginning because I was like, this is so extreme.
00:56But then some people I spoke to said, not really, because it will never exceed 2x.
01:01So actually, they've used 3x, 4x, and even 5x as more extreme.
01:06And I was like, I guess it's just slicing and dicing the day.
01:09What do you think, Eric?
01:10So now I'm asking.
01:11It's just one more layer to try to give a product to people who might want to play it.
01:15But earnings usually happen after the close, which is where the big news would happen.
01:19So if I had to guess, I think these will struggle.
01:22They used to come up with monthly and quarterly resetting.
01:26That way you could get 2x for a prolonged time, which is the opposite of this.
01:30But it's also trying to customize your leverage.
01:32But nobody cared.
01:33They just tend to use the 1x daily resetting ones.
01:36And I just don't know how, like, will this be more costly for the issuers or the market makers?
01:41I mean, we've talked about this in the show and even off air that leverage funds, a lot of the
01:46market makers may be steering away for them.
01:48I'm sure some are making a lot of money from them, but then these swaps and derivatives, they cost a
01:51lot.
01:52And then so to rebalance six times a day, I don't know.
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