The U.S. Securities and Exchange Commission is reviewing how far the exchange-traded fund structure can be stretched, after a surge of proposals for exotic crypto, leveraged and event-linked products flooded the market.
The ETF originally functioned as a low-cost vehicle for owning a broad market portfolio. It has since evolved into a distribution mechanism for exposures that once required a futures account, a private placement, a crypto exchange, or a structured-note prospectus. Wall Street is now seeking to package almost any financial idea into a tradable ticker, including Bitcoin, funds promising two or three times a stock's daily return, private assets, and contracts tied to elections or economic events.
On June 30, the SEC issued a request for public comment covering several categories of products, including:
