Defiance Politely Asks the SEC to Let It Sell An ETF 8-Ball

Defiance Politely Asks the SEC to Let It Sell An ETF 8-Ball Thornton McEnery Wed, September 9, 2026 at 7:05 PM GMT+2 5 min read XMAG Defiance Politely Asks the SEC to Let It Sell An ETF 8-Ball - Moby THE GIST Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here.

There is a moment in every wild party where somebody suggests a new thing that will make the night 10 times more fun for 45 minutes and excruciatingly worse for the days that will follow. Defiance ETFs has decided that we've reached that point in the ETF party and just filed its suggestion with the Securities and Exchange Commission… sixteen times over. WHAT HAPPENED Defiance wants to launch 16 new ETFs, all built on the same idea and all named for it: the Defiance 2X Hourly Reset ETF, one each for NVDA, TSLA, PLTR, GOOG, META, MSFT, AMD, MU, TSM, MRVL and six more.

Paperwork went in through Tidal Trust V with the clock set to run 75 days, so they go live around November 4 unless somebody stops them. Each fund promises double whatever the stock does, and then delivers on that promise six separate times a day. Every roughly hour-long window starts fresh, with the leverage reset to 2x from wherever the stock happens to be sitting.

The filing says outright that the promise applies to nothing else. Not to a day, not to a month, not to a year. Six windows, and after each one closes, whatever happened in it is permanent.

Your losses don't get a fresh start when the leverage does. A stock that whipsaws its way to nowhere by 4 p. m.

can leave the fund substantially poorer, and every additional reset is another chance for that to happen. Defiance gets its exposure mostly through swaps, then short-dated options, and will hold the stock outright on margin when the derivatives dry up. Between 40% and 60% of the fund sits parked as collateral rather than doing anything.

Each reset skims a basis point on whatever gets traded. Six times a day, 252 days a year, that adds up to a toll nobody notices individually. WHY IT MATTERS Getting back to the party analogy, Defiance has clearly recognized this is the inflection point in the ETF frenzy where the drugs are starting to wear off and the anhedonia is creeping in, leaving the more devoted party animals to chase a new hivh.

So Defiance just asked the SEC if it would be cool to drop an 8-ball on the table and see who's down. Unlike an 8-ball though, the comes with a warning label. Buried in the filing is a table showing what a holder loses when the stock finishes the year exactly where it started.

At 25% annualized volatility, down 6. 1%. At 75%, down 43%.

At 100% volatility on a stock that went nowhere, down 63. 2%. Story Continues Then one of the more remarkable footnotes we've read in a prospectus.

Those figures came from daily closing prices, and the filing concedes that intraday volatility, the thing actually driving this fund's compounding, may run significantly higher. Defiance published its own math on how much you'll lose, then noted the math was generous. One stock.

Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick.

Tap here. The 50% wipeout threshold applies separately to each of the 6 periods, and compounding across them could wipe out a position even if no single period drops 50%. You can lose everything in one trading day.

In extreme cases, in one execution period… and possibly before lunch. The SEC has spent the past year saying no to higher leverage. In December it sent letters to 9 issuers covering more than 100 proposed 3x and 5x funds, and in March it convened a short call with fund lawyers to say plainly that these should not launch.

No 3x or 5x single-stock ETF exists in the US, and the rule the agency keeps citing caps new funds at 2x. Meanwhile it's asking the public what it thinks about ETFs that resemble gambling, which at this point is like polling 6-year-olds on sugar. Defiance found the workaround.

Six 2x resets a session delivers far more effective leverage than any 2x fund without ever filing for a bigger number. Sure, nobody asked for a better drug, but they are definitely asking to get higher. Then there's SKHY, which is SK Hynix, and which is hard to believe somebody typed on purpose.

South Korean regulators tightened their rules this summer after retail money piled into leveraged funds tracking SK Hynix and Samsung and got flattened, badly enough that the noise reached the president's office. Defiance's is now proposing a product that resets with double leverage multiple times a day on the exact stock that set off a foreign crackdown weeks earlier. Defiance says the point is letting investors express an intraday view over a one-hour window instead of close to close, and who are we to say that they're wrong?

WHAT'S NEXT These would go live around November 4 on their own, and nobody at the SEC technically has to say yes. That's how the 75-day clock works, and the agency has to physically step in to stop them… while it's simultaneously taking public comment on whether ETFs that function as gambling should exist. Feels like a strange order in which to do things.

On that note, one of these is certainly worth a longer look. DRAM isn't a stock, it's the Roundhill Memory ETF, so Defiance has built a fund that applies 2x hourly leverage to a rival's fund. We love the balls.

All of this is hard to pin this on Defiance, though. The demand is enormous and completely real. More than 450 leveraged single-security funds have launched since 2022 and the category is nudging $150 billion, making it look like if asset flows could throw a rave.

Any asset manager who passes on that just watches somebody else collect. Defiance read Rule 18f-4, found a legal route to more effective leverage than the rule imagined, and filed. That's how capitalism works.

The SEC has spent a year saying no to 3x and 5x without ever explaining why 2x is the magic number. Leave a cap lying around with no principle underneath it and someone eventually walks around it. Someone just did, and they think you should just try it.

Just for tonight.