Neither official expressly called out AXS by name. AXS didn’t immediately respond to a request for comment on the officials’ statements.
Including AXS’s planned funds, there have been at least 82 single-stock ETFs proposed this year. Other issuers hoping to list such products include GraniteShares, one of the largest providers of single-stock exchange-traded products in the world, and Direxion, one of the biggest issuers of leveraged ETFs.
The Financial Industry Regulatory Authority (Finra) in March warned that “complex products and options,” pose dangers to retail investors which require broker dealers that offer such products to ensure they are in customers’ best interests. In a controversial move that elicited hundreds of comment letters,
Finra proposed several methods of dealing with complex products, including requiring retail investors to pass a “knowledge check” or test before being able to make a purpose. Finra also wants to define what a complex product is.
Derivatives-based funds allow both retail and institutional investors to bet on market declines and to hedge against specific stock or indices performance. While such products have seen their popularity wane due to past market meltdowns, recent pervasive market volatility has triggered renew interest.
Fund company Direxion has also applied for SEC approval to offer single-stock leverage ETFs featuring Apple, Microsoft, Alphabet, Netflix, Meta Platforms, Nvidia and Tesla in a double-leverage bull form and in single and double inverse forms.
On its website, Direxion said the products are “definitely not [for you] if you are a conservative investor who: Cannot tolerate substantial or even complete losses in short periods of time; Is unfamiliar with the unique nature and performance characteristics of funds which seek leveraged daily investment results; Is unable to manage your portfolio actively and make changes as market conditions and fund performance dictate."
Staff writer Tracey Longo contributed to this story.