Asset managers that had planned to debut leveraged ETFs linked to SpaceX on the company’s opening session were told to hold off and list their products on the first trading day following the IPO, four people with direct knowledge of the matter said. The adjustment removes the opportunity for traders and speculators to engage on the first day, and delays inflows into the newly created funds.
One industry executive said the firm had hoped for a Friday launch but would now wait. "We had really wanted to be out on Friday," said Matt Markiewicz, head of product and capital markets at Tradr ETFs, who declined to comment further on the timing. Tradr’s planned 2x long and 2x short ETFs are expected to begin trading on Monday on Cboe Global Markets.
Markiewicz also highlighted the stakes involved for issuers. "There is a lot at stake; these products could end up holding a total of more than $10 billion," he said.
Multiple issuers seeking SEC approval to list leveraged funds had anticipated launching their products in sync with SpaceX’s market debut, industry sources said. Instead, exchanges informed them on Wednesday that listings would be postponed to the first trading day after the IPO, according to four sources. Three of those people said the exchanges pointed to concerns from the SEC that simultaneous introductions of leveraged products could complicate the stock’s debut.
The SEC did not respond to requests for comment. A spokesman for the Nasdaq Stock Market, which will host the SpaceX IPO as well as some of the ETFs, declined to comment. Cboe Global Markets and the New York Stock Exchange could not immediately be reached for comment.
Leveraged ETFs, introduced in the United States less than four years ago and expanding rapidly over the past 12 months, have not previously launched at the same time as the underlying equity, according to people following the filings. Asset managers had hoped that being active the same day as the IPO could provide an early placement advantage in what some analysts expect to be a multibillion-dollar competition for assets in the weeks after the listing.
"There are billions at stake in the first few weeks alone," said Todd Sohn, an ETF analyst at Strategas.
Several established leveraged ETF issuers, including Direxion, GraniteShares, ProShares and Defiance, have indicated plans to roll out 2x leveraged long ETFs tied to SpaceX as soon as they are permitted, based on their filings and promotional posts on investment forums and social media.
From the perspective of market structure and price discovery, participants pointed out that investors will have multiple channels for exposure during the early trading period. "Investors will have multiple options; they will be able to get SpaceX exposure because of early entry on the part of passive index providers, or through the stock itself, or through the leveraged (ETF) ecosystem, which adds up to a pretty robust mechanism for price discovery," said Simeon Hyman, global investment strategist at ProShares. Hyman said ProShares had no plans to launch early and was comfortable waiting until Monday. "The intent of everybody is to have this (IPO) work smoothly."
The delay imposed by exchanges shifts the timing of potential capital flows into the products and changes the initial operating environment for issuers that had budgeted for simultaneous listing activity. For managers and traders who anticipated capturing near-immediate retail and institutional interest, the pause reduces the chance to benefit from any immediate opening-day price move in the underlying stock.
Context limitations - The sources for the timing change were cited as four people familiar with the matter. No regulatory spokesperson provided an on-the-record explanation beyond the exchanges' cited SEC concerns, and exchanges that declined or could not be reached did not offer additional public details.