SEC Rejects 3x and 5x Leveraged ETF Filings for Exceeding 200% VaR Limit

The Securities and Exchange Commission has formally rejected multiple applications for 3x and 5x leveraged exchange-traded funds, citing violations of the 200% Value-at-Risk limit under Rule 18f-4. The regulator notified issuers on December 2, 2025, requesting they revise their strategies to comply with federal leverage restrictions or withdraw their filings. Rule 18f-4 of the Investment Company Act of 1940 caps leveraged ETF exposure at 2x under standard conditions, effectively barring ultra-leveraged products from registration.