The SEC has requested revisions to multiple ETF filings that propose 3x and 5x leverage ratios to ensure compliance with Rule 18f-4, a regulation governing derivatives use by registered investment companies.

Rule 18f-4 requires funds to adopt risk management programs and adhere to value at risk limits for leveraged products. The regulation generally limits leverage to a set threshold, with proposals exceeding this level facing heightened scrutiny.

Direxion, an ETF issuer known for its suite of leveraged and inverse funds, appears among the firms affected by the SEC’s revision requests. Many of the proposed leveraged ETFs included exposure to tech stocks as well as crypto assets, including Bitcoin and Ethereum.

The regulatory action reflects the SEC’s continued application of Rule 18f-4 to oversee derivatives and leverage in ETF structures. Proposals for highly leveraged ETFs may require modification or withdrawal to meet regulatory compliance standards.