SEC suspends approval of high-leverage ETFs, concerned about excessive risks

The U.S. Securities and Exchange Commission (SEC) has issued a series of warning letters to some of the country's most prolific high-leverage exchange-traded fund providers, effectively halting the launch of products aimed at offering two or three times the daily returns of stocks and commodities.

In nine nearly identical letters released on Tuesday, the SEC informed companies including Direxion, ProShares, and Tidal that it would not proceed with the review of proposed issuance products until key issues are resolved. The core concern of the regulator is that the risk exposure of these funds may exceed the SEC's limits on the risks that funds can take relative to their assets. These letters instruct fund managers to either modify their investment strategies or formally withdraw their applications.