Key facts
- Asset managers aiming to launch leveraged ETFs tied to SpaceX's IPO have been told to delay their debut until Monday.
- The delay is due to concerns from exchanges and the SEC that coupling leveraged products with the IPO could complicate the debut.
- This setback denies traders immediate access to leveraged exposure to SpaceX's stock on its first trading day.
- Firms like Tradr ETFs, Direxion, GraniteShares, ProShares, and Defiance are involved in launching these leveraged products.
- The ETFs are expected to hold significant assets, potentially exceeding $10 billion in total.
- SpaceX's IPO is set to list on the Nasdaq Stock Market.
Asset managers eager to launch leveraged exchange-traded funds tied to SpaceX's upcoming IPO have been informed they must delay their debut until Monday, according to four sources familiar with the matter. This setback prevents traders from immediately accessing leveraged exposure to the stock on its first trading day.
Exchanges communicated the delay to the asset managers on Wednesday, citing concerns from the Securities and Exchange Commission (SEC) that coupling leveraged products with the IPO could complicate the market debut. The SEC did not respond to requests for comment. A Nasdaq spokesman declined to comment.
While there is no direct precedent for leveraged funds launching simultaneously with an underlying stock, asset managers had hoped to gain an advantage in what analysts predict could be a multibillion-dollar race for assets in the initial weeks of trading. Tradr ETFs confirmed its 2x long and 2x short ETFs will now debut Monday on Cboe Global Markets. The firm's ETFs could eventually hold over $10 billion in assets.
Major players in the leveraged ETF space, including Direxion, GraniteShares, ProShares, and Defiance, plan to introduce 2x leveraged long ETFs as soon as permitted. Simeon Hyman, global investment strategist at ProShares, stated that his firm was comfortable waiting until Monday, emphasizing that the intent is for the IPO to proceed smoothly. In Europe, ETF manager Leverage Shares launched a 3x leveraged long exchange traded product tied to SpaceX, which will hold cash until Monday.
Todd Sohn, an ETF analyst at Strategas, noted that the ecosystem of investment vehicles forming around SpaceX, even before trading begins, illustrates the significant investor interest and potential for robust price discovery.