Wall Street Tests Regulators’ Risk Appetite With 3x ETF Bids

A trio of money managers want to sell exchange-traded funds that amp up swings in Tesla, Bitcoin and other assets to a rarely seen degree, setting the stage for another test of regulators’ tolerance for ultra-risky offerings.

Defiance ETFs, Themes and Direxion have filed for leveraged products designed to deliver three times the daily return of some of the market’s hottest trades. The approach is novel: 3x ETFs on single stocks don’t currently exist in the US, given volatility rules set by the Securities and Exchange Commission that cap how much leverage a fund can offer.

How the proposed vehicles ...