This ETF is Rated R

really get the job done. But in the wrong hands, they can actually cut your hand off right like a chainsaw or worse or worse right, So we want to demystify these products. Um, you know, to me, they're demonized a little bit. But I get why they're demonized. I think, you know. The reason rated R to me is a good metaphor is because I believe that in our classification system, we give them a red light just to say, hey, look, there's some some stuff you need to know about these

So let's pause. But like in the movies, just because ten year olds exist doesn't mean Quentin Tarantino should have to stop making movies. So we were okay, with leverage, ETFs, vix ETPs. These these products that are for professionals, we just think they need a rating like a movie. So again we've got green yellow red because we can't use the movie ratings because it's like a copyright unfortunately, so

we use green yellow red power. These E T F s UM are basically all instant red lights except for the why. The reason is because their triple leveraged or double leveraged, and that means that they'll move twice as much as the index in a day, but they only promise it per day. The way their structure, which we'll get into, you don't actually get that two or three times over the long haul. Like there's a corrosion element

that's like a ticking time bomb. So the longer you hold it, the more you could just lose money because of this sort of um the math of rebalancing every day and sometimes most of the time all the time. These products come with xs, and that's one way that you can know that you're playing with Yeah, they had they literally say two x or three x UM. They even have the word daily in them to like sort of accentuate that you need to use these for the

short term. And who's going to help us understand this world? Um, Sylvia Jablonski. She is from Direction, which makes the most chainsaw of the chainsaws, the three X. So there's like the big chainsaw. Well there was, Look, there was there was the regular like the little tiny electric chainsaw, and then there's the big big chainsaw. Then pro Shares came out with two X, and then Directions says, oh yeah, three X. Just you know, if you're really feeling lucky today, okay,

on this episode of Trillians playing with power tools. Okay, Sylvia, welcome to trillions, Thanks for joining, Thanks so much for having me. So you're the head of capital markets at Direction. L. E. T s. Yes, okay, So why I do these products exist? So the quick answer is that we would like to democratize leverage. How does that sound? I mean, I don't know what that means. So what is that? Yeah? Exactly? So, um so there there are three beta products, as you

guys were discussing. So for every hundred dollars you invest, you get three hundreds of exposure to the underlying index for a one day period. So why is that interesting? Well, clients can use these to express high conviction on short

term tactical opportunities. So, for example, if you think that you know semi conductors are gonna get crushed for the next three days or so, you might look at a three x bear fund and express the view that you think semi conductors will be both low vaulatile downward trending and have high performance in that day period, and generates some MALFA from that trade. So leverage effectively amplifies my it amplifies your view for the day, and not only that,

it allows you to allocate capital efficiently. So you put down a hundred dollars and you get three hundred dollars of exposure. Maybe I'll walk you through an example just to give you a sense of real world what actually happens. So let's say um SMH is down, semiconductor et F is down five percent in a day, So we have a bear fund. It's called s o x s now.

If the underlying e t F that we track is down five percent in a day, you have a hundred dollars three hundred of exposure five percent move three beta fund, so you earn fifteen percent as that e t F or index goes down five percent in a day. Now on day two, if you have another move downward of five, you make seventeen point to five. And this is what Eric was referring to. This is sort of the positive side of it, where the compounding and the rebalance work

in your favor. So the market has been trending downward, you got the direction right. Five percent in two days gives you thirty two point to five over a two day period because of the three x and because of the rebalance. Now the other side of that, or where you don't do quite as well is if semiconductor is down five percent on day one and up five percent on day two, you're not flat. So it's not like buying and selling apple apples up five, down five, you

make zero. In this case, you're actually down two point to five because on day one we rebounds the fund. So you had a hundred three hundred, you made fifteen, you have one fifteen. We need to rebounce the fund and buy an additional forty thirty dollars of exposure from three or fifteen to five. So this is like you go to home depot rents rent a power tool, but it comes with like compounding problems that you might not know about or compounding benefits and let me jump in

on the daily rebouncing. That is essentially what is makes the screwy math. People assume you buy it and then oh, a year later, why am I not up or down three x? The reason it has to reset daily is because people come in and out of it. Right. It's not like you make it for one day and then you close it up for a year. That would make sense then, right to have it that long term, But because it's a daily trading vehicle, you have to reset every day because of people coming in for absolutely right,

and that's a good point. So there are actually monthly rebounds mutual funds that are leveraged so you can hold them for thirty days and on day thirty the funds rebalanced and you get two times one month's performance of whatever index you're tracking. With the daily funds, it is rebalanced on a daily basis, so you know, for example, if if you had the smp FI this year, it doesn't mean that the bull fund is up thirty, and it doesn't mean that the bare fund is down thirty.

It can be anything. It depends on the path that it took to get there. So trend is your front. If you look at the Obama bottom two thousand nine Tech until today it's up two. I know you love this e t F tech out. We've talked about it before. But if you look at gold miners Techo. By the way, techle is, I believe the goat performance wise because TECH

has done nothing but go up. So in this daily rebouncing, as long as it keeps going up every day, you actually compound that daily resetting that the daily resetting starts to work in your favor, you can get four or five times. It's the volatility that will USU up. That's called volatility drag right exactly. So so trend is your friend and range bound volatility is essentially the enemy of Levern University tfs because what happens is during those periods

the e t F s de kay. So you have the market going up for a couple of days, the bull funds increased exposure, the bear funds reduce it, and then all of a sudden you have a down day. You have too much exposure in the bull, not enough exposure in the bear, and it doesn't ever catch up. So a lot of hedge funds, for example, have figured out that during those periods, you know they'll shore both the Bear and the bull fund because they know that neither will do well in that market environment. So I

have to have low volatility and training markets. I want to get to that trade. It's called the double short. That's like some like hardcore stuff. But well, let's just for one second go over tackle, because tackle, to me is the ultimate um siren. I mean, you look at the returns and it is seducing. So this is dale this is the compounding effect in effect. So the ten years tackle is up four thousand percent, but the index that it tracks is only up fos so it returned

ten times. If you and in ten years ago, however, if we found some volatile area, you may find the index was up, but the three x CTF was down because it was a volatile road. Tech just happens to be a much more smooth path up. And I think that's the big takeaway. Is it safe to say? The compounding effect, which is you know, this is like a full moon. It's beautiful when it happens, but it's not

the norm. It's well, it's been it's been the norm for the last decade, right, it's no longer than yeah, because of the FED and we didn't have Chinese trade wars. But if you look, I just looked this up this morning. Actually, okay, so a year to date tackle up fifty three, Bloomberg told a return, but the month of May tech s the bare fund up and Tech l down, so it lost its year to date return because markets are volatile and the index is moving down. So those two things

together have essentially created a perfect storm. And that's obviously around the macro backdrop and China and Huawei and all that. But so I used a word a few minutes ago, I said bet, and you use the word view, yes, And I'm interested in that because I think one of the like a layman perspective on this, it really feels like gambling, right, So so how is it not gambling? So I would I'd throw the question you, how is

investing not gambling? You know, if you view buying IBM or Apple, you know, a hundred percent risk concentration in one name, as an investment or a gamble, then I would say your definition is fair either way. You know, they work just like stocks, do. I think because they have amplified exposure, there's this sense that the risk is certainly a lot higher and people might equate that risk to say, a gambling risk. But these are you know,

investment tools. They're they're very you know, strategic portfolio allocation tools for short term tactical traders. You know, I think a lot of them use a whole lot of math and signals to make their decisions on short term trends, long term trends, you know, hedging over the long term, things like that. So I would consider it as much of a trade as buying buying a tech soccer or a high beta stock in a volatile market. But the key word is that they are trading tools, and to

that end, who's using them. So the mix of individuals using them is across the board. So you have the retail community, you have hedge funds, you have are a s, you have large asset managers. So it's everyone from you know, my mom to x y z hedge fund to x y z R market making shop. What is your mom say when when when you talk to her about my mom loves leverage, loves direction, loves tech trading. Now but three X China, Yeah, of course, of course, you know

we wouldn't be related if she wasn't trading that. No, But you know, so, actually it's a fair question. But you know, so, my mom is not a short term tactical investor, right, She's probably saving for entirement and she's you know, a long term buy and whole investor. So for her, she would have to have a short term conviction. She would have to be an active day trader looking at her account all day long to use these funds.

That's who we say is sort of the safe person, you know, the person who stops at the red light knows it's going to turn green, but sitting there watching it. Right, It's it's not somebody who's gonna, you know, put in a trade and then go golf or play tennis for a month or two. That's not not the to that. And like what what is um if not your mom, maybe my mom? Like what what does she need to know before she were to ever touch something like this?

So she needs to know the basis of how the products work, which we talked about that trend is your friend. Low trending, low volatility trending markets are the best environment for these e t f s to be held longer than a day. Volatility means trade very actively. But either way, she needs to know that she has to actively monitor her position rebounds frequency or frequently, and she needs to

have essentially a very high risk tolerance. She has to understand that the losses could be magnified as well as the games. For the record, I don't think my mom is ready for an um um. Let me just give one example here by the way Yin and Yang, which I mentioned earlier, there's the three X long and short China there. Over the past ten years, they're both down. Yan is down, Yang is down, and f x I, the big China et F is up. So I think

that's an example because China has been volatile. Absolutely, So that's the sort of major warning. That's the hand getting cut off. If you went in there, you were probably unhappy after a couple of years, whereas Teckle you looked out because it went up nicely. Absolutely. And if you look at the if you look at Yin and Yang and the China products year to date prior to UH that late day in April, ware Trump came out and

said no deal. Those ETFs were actually we saw a volume increase twenty day average daily volume increased by plus and those products the performance was or more. In the Bull Fund and it completely switched on to your point, there was this macro event and there was volatility. So now both funds have essentially over the long term experienced losses. And Nugget and Dust are another good example. You know, those are the most volatile et F s and they're

very much for a term trading tools. So there are three X gold miners, bowl and bear et F products and for those, you know, they were definitely one day hold periods, you know, intra day trades. If they were held for the long term, you would have lost on both the bull and the bare product. But if you were looking at sectors like SMP five hundred and tech L three x tech for the last decade when it's been low, volatile and trending, those trades have really paid off.

Speaking of Nugget and Dust there those are tracking gold miners stocks. There's great great tickets. By the way, well there's jay nug which tracks junior gold miners, which we all call like the ultimate like that is like the

hardest of the hardcore. At one point in the first half of the year it was up six and the volatility on this thing sometimes gets to fifteen times the SMP five hundred I mean this thing should they you should ship as an X with the by order when you you know what I mean, you need so you know, you've got to really be able to handle a lot. I mean, that's that's way more vaulatle than bitcoin even

at the time. Uh So some of these get into some really even like the underlyings volatile, right right, so more the more volatile the underlying is the more volatile. Obviously the three x CTF will be um. And what I would say about that though, is what's really sort of good is that it's evolved over time and that the holding periods for J nugg and J dust and nugget and dust are a day or less, whereas the holding periods for three x SMP could be a couple

of days to a week. So the average holing periods in general for leberty tfs have come in a lot, which is great. People are trading them and not you know, kind of blindly buying them and hoping for the best. And that's what we look for. We want to make sure there's a lot of turnover, and if so, we're like, okay,

the people are probably using those correctly. There's examples of ones that should be traded that aren't um like USO is a good example, but leverage mostly I think the shares trade every day, so that means the average holding periods a day or two to that point. Just to give some wide numbers here, there's two D and thirty leverage inverse ETFs, but the only account for fifty billion dollars, which is one point five percent of all e t

F sets. However, they make up probably eight nine of all e t F trading, right, so again they're people trade the crap out of them, which is what you that's being used correctly for the most part. Yeah, absolutely, that's what we want to see. And if you look at the last couple of weeks when we've seen all come back into the market, we've traded about a third of our assets under management almost on a daily basis.

So people are definitely investors are definitely trading and turning these over in the last few days when volatility is there, which is great because again I've been doing this for I've been with Direction for about a decade now. When I first started, I think that the concern around education and how to use them was, you know, less than it is now. People are definitely trading now and the holding periods have come in, which is and most ets

hold stocks, bonds or futures. Um, these don't these hold swaps. Can you explain what a swap is and who it's with and whatnot, Like what's in the fund? Sure, So we have bull funds and bear funds. So in the bull funds it's about two hundred and fifty percent swap. And then the remainder of the position is a basket of stocks or a very liquid one day to e t F So for example, SMP five hundred basket might be or spy might and the rest is a swap on spy. In the bare fund, it's essentially one or

three percent exposure via swap. So the way that swaps work is on the long side we essentially received performance on the index. On the short side, we owe performance on the index. Two banks. So we have seven counterparties right now, um, and you know our competitor has the

similar group of counterparties as well. So this is like yes, Golman Credit Suites, UM BMP Party, Boss City Group, UM, Morgan's you know, Morgan Stanley, BAM, l U b S. Those are some of our some of our counterparties UM, and what we do on a daily basis is we look at what's going on with the underlying index. So let's say SMPS rallying today, UM, and you have two factors, the primary market in the secondary market, so secondary is the index itself and primary is creation and redemption activity.

So that's authorized participants essentially creating or redeeming shares. And we have a number at the to the day. So if let's say the SMPS up and there are a lot of creates, we go to whichever bank City Ubs Meryl credits with and we say we need to buy fifty million of exposure and swap to SMP. If there are redemptions, that number could be you know, five million, whatever it is. UM. We're buying and selling swap on a daily basis and managing the fund that way, so

the bank does the trading. That's the important thing. We touched on gold China Tech. What isn't leverage used for So the issue or something that would hold us back from launching a new fund would be liquidity in the underlying and options for us to create the fund. So, for example, one of the most top popular topics out there has been bitcoin related products or marijuana related ETFs.

You know, the liquidity and the availability of underlyings is just not there to support a three beta fund, So you know, things like that we tend to stay away from. You know, direction is kind of risk averse in terms of, you know, we don't want to launch a product that if there was an underlying move of we couldn't rebounce

on Daihi basis. So, for example, we stay away from vix because we just worry about what would happen with the futures market and we kind of saw that blow up UM a couple of times in history here, So we tend to stick to very liquid. They can be volatile, but they have to be liquid and there has to be a lot of options to build e TF. That's how crazy the VIX area is. But the three X people will they're like, we're not, we don't go there. Yeah, that we gotta have Velocity shares in here. I mean

that's like that's NC seventeen territory. Yeah. And how lucrative is the leverage space. Well, the management fee on the majority of three beta et F products, and we have about thirteen billion a u M. Most of that is in three x CTF. So that gives you a sense of you know, the profit on on the e t f s. Of course they're financing expenses and things like that.

But um, you know, when we we look at the revenue of the E t F industry, it's something we do every year we called welcome to the jungle because there's just not a lot of revenue, so be warned. But the leverage providers do the best. Uh, they punch way above their weight. They might rank eleventh and twelfth asset wise, but they probably rank fifth and sixth revenue wise, because that when you trade, traders don't really care what

the fees are. That's why black Rock still makes the most money from e M even though most people are going to i MG, because the traders that they don't really care that it costs whatever seventy basis points. So I think you guys are a good takeover target. Frankly for a company looking to get a foothold into e

t f s steady ready revenue stream. Janice bought Velocity Shares, which was a wild head scratching acquisition, but it honestly, those Velocity shares are contribute like the revenue of janiss et F line. So what's the player? Are you guys gonna are you looking for for bigger fish or or are you happy where you are? We are the big fish right now, there you go. I definitely tell you right, yeah you should. Here's some inside information and I am now fired. Um just quickly before we go onto some

other topics. The double short, yes, Now, this is a trade that hedge funds love to do, where they short both the three X long and the short. Basically, it's a bet on volatility. What percentage of your three x et F family volume is the double short versus regular use? I would say it's about and in a way it's probably shrinking, which sort of seems counterintuitive because that trade is now working. So a lot of hedge funds have been doing that trade for many years, but as we said,

the market has been low, volatile and trending. So the problem that they face now is that you know, the trade definitely works if you have volatile markets and you have say a three x gold miners bull fund and goal miners bear fund. They're both decaying, so if you're sure both of them, in theory will generate alpha. The trick, though, is the borrow, and as we have more volatility, the cost of the borrow for the hedge funds to employ

that trade goes up. So you need some serious returns to make up for what they're charging you to short the products. But you know that being said, the biggest double short trades are still in you know, tax semiconductors, emerging markets, China, and it's probably about ten of the e T F A U. I'm out there. So the way that we you know, people always say, why do you talk about the double shore you work for the company. Isn't that an opinion that it's it's bad. It's absolutely not.

The products are tactical trading tools. If you shore both of them, it's a way to generate alpha. And for us, you know, when when you go to or a client goes short nugget or dust or whatever it might be, someone behind the scenes has to create those shares so it doesn't hurt our A U M. Actually like I'm I'm really intrigued by the idea. It's I love that has a name totally and that you can do it, you know, in multiple different uh, with multiple different funds. Uh.

It takes Cojones. I think that well, I think it was a credit space or somebody just study on the double short and they found that it does work most of the time. But when it does work, when that compounding effect kicks in and you start to that starts to kick in and your short, you know, that downside is unlimited, right, and that's when it's not one hand is two hands. Yeah, it's exactly right. The tail risk

on the double short is is scary. Yeah. So the two big risks for the trade are basically a trend that you catch a trend on one side or the other. And the second thing is is borrow risk. So recall risk and rewrate risk. And you know, we we saw that this trade. You know, the borrow was very um efficient. It was cheap, i would say, for you know, prior to this year, in the last decade or so. But that's changing. It's becoming more expensive to finance these trades,

so that increases your risk too. Um. So, you know, unless you're in a position where you're a huge hedge fund and you have awesome borrow, it's it's it's not an everyday trade, right, It's it's definitely more of a sophisticated um you know, hedge fun type of trade. UM. So one question on some concerns about leverage besides the usage which we just went over. UM. The Boston Fed did a study but I've seen this before, which is basically they looked at different ways et f s could

actually increase structural risk to the market. And one of the ways they did they said that there could be some extra risk is the amplifying of volatility by leverage ets because here's the quote. Basically, at the end of the day, you rebalance and both must trade in the same direction as the market moves earlier that day. So that provides a little amplification of what just happened. And I think it's that daily rebalancing at the end of the day that some people have concerned about. I know

there's a lot of maybe histrionics around it. Can you just set a straight about what's going on and whether there is some extra risk there? Sure? So there there are three factors. One is that you have both funds and bare funds, so the trade at the end of the day on either side is not as big as you think because you have to rebalance both funds, right, so there's a net position there. The second thing is

that there are often contrarian trades. If everything is sort of down today, let's say tech semiconductors SMPR downstay we often see creates come in, so people are taking a contrarian view, or else they're unwinding a hedge, so that reduces the buy into the end of the day trading. Um, it's a lot less than you would think. So I looked back at this and on our most volatile day, we were one half of one percent of the close activity. On an average day where one tenth of one percent

of the end of day activity. So we basically are an absolute blip on the radar. This is for e t fs in general when you look at them. I mean even all ETFs combined only own maybe eight percent of the stock market, and if leveraged is one point five percent of that eight percent, and you're down to some pretty small numbers. Usually context calms people down with e t F worries. When you start to show the whole big picture, they're like, okay, um, but that's something

that comes up repeatedly. I'm sure you get questions on this a lot. Yeah. I think I think that you know when you see big moves in the market and you think of three beta funds or any kind of product that has a tendency to have high volatility and needs to buy or sell in the market, and especially at the end of the day. There's this general thesis that, oh, well,

it must impact the clothes. But the truth is, again, on the most volatile day, we were one half of one percent, So that's a two thousand and eight end of day trade. So what when you talk to your power users, what do they want that they can't get yet? So well, a lot of people want, you know, three x anything tacky like three x five G, three x POD, three x bitcoin. Um. But there have been you know,

we're always getting good ideas. We have a lot of traders that trade internationally and they would like to see, you know, more bowl and bear funds on single country They would like to see, um, you know, more bone bear funds on specific regions that might be impacted by say, you know, European politics, Brexit, things like that. So there are symptomatic ideas. UM. We were actually pushed to use

leverage in different ways for buy and hold clients. So we have light leverage to so one point to five for traders who don't trade, but want a little bit. So is that single x it's one five x exactly. Yeah, so you're getting a little bit of enhancement over the long run. And that's that's just you know, a lot of clients said, Hey, I just think that I'd like to be invested in the SMP five hundred for the next hundred years because it's twelve annulyzed return no matter

what happens in between. But I don't know if I want to amplify it. I don't want to three x, but two point t five extra makes sense to me. The amount of momb taking on diet Coke, Yeah, diet Coke, Yeah, you know, both both leverage companies. UM. I frequently compared to the Godfather and Godfather too when he's like, we're trying to take the family legit, you know, that's his

big thing. They both came out with the line of plain vanilla E T F direction has some some somewhat successful ones that are just normal, right, Like you have q q QI, which is the equal weighted cues, which we just analyzed a couple of weeks ago in the show. Um, what's behind that? Why not just be like that leverage provider? Why do those other ones. It's like a little off brand because I think that I think we've done really well with the tactical clients. So there's three types of

clients I think out there. One is tactical, their short term traders. They love us, they know us, they're comfortable with three X. Then you have thematic and strategic. So thematic are the six to twelve month guys, and they're

not necessarily using leverage. They're more less looking to express thematic views or macro views, and they might do something like, you know, we launch relative way e t F there one fifty fifty, so they're looking to you know, express a view that they like value over growth for the next six months and they'd like to you know, get the benefit of value performing and then the spread between value and growth performing and one product. So that's a

thematic you know, not high leverage products. Standard deviation is similar to the underlying one beta product. It can be bought and hold for long periods of time. And then there's the strategic client, which is Eric, you know, the guy or girl who uses q k q E, which is crushing it right now because fang is getting crushed right now. So that's you know, a Nazaki product and and that's really you know, the long and I would

consider portfolio plus in that group too. It's the long term strategic asset allocator, you know, holding periods of years. They might just want a little bit of additional exposure to an index like one point to five, or they might want you know, strategic beta like an insider et f A Nazakia something like that. So we touched. We we basically realized, you know, hey, we're really good at doing this one thing for this one group of clients.

But that's there's other player types. There's other player types too, and they're the you know, massive areas and asset managers out there. So so because this is by and large sort of a daily ritual with folks, and you describe these different player types when you guys look at the sort of the I guess the inflows and the trading patterns. How big of of of views are people expressing? How much are they putting in? There are some pretty big views.

There are some pretty big views. You know, we can we have days of twenty million or forty million shares traded in some of our top ets. Said lately, we've seen you know, massive increases across the board and everything that has to do with anything you know, growthy, high beta, China trade terraff related. So um, the trades could be you know, anywhere from a million to sixty million. They're

big tickets. They're definitely big tickets as compared to you know, a newer product that we might launch where somebody puts in fifty. These tend to be bigger trades. And what do you attribute that increase in the size of the trades to. I think opportunity. I think short term opportunity.

So we really see big bumps in an AUM and trading around UM times like earnings for example, where people have very strong conviction about certain names coming out, we'll see a lot of flow and we'll also see a lot of performance and then just big macro events that move the market. You know, the tactical technical traders are, you know, the people who understand the products and have a strong opinion. It's a great way. You know, where are you gonna make thirty three percent in a month

right now? Well? Semi conductor bare fund that trades not for everyone, but for the sophisticated trader who has a view on semi conductors. It plays out. It's it's a great short term outh opportunity. Yeah, there's a hedge fund I interviewed from my book UM Metropolitan Capital I believe is the name, and Sharon Snow who was a great interview.

This hedge fund does nothing but leveraged ETFs, but they only invest once in a while, like like eighteen different metrics have to line up, and then they know they want that. They they're so convicted they go all in with the three x UM. So it's sort of like they just wait and wait and wait, and they see an opportunity and then they just use the leverage GTF to make it. And it's a really interesting way of investing. It takes a lot of discipline and patience, but when

you pounce, you pounce hard. Yeah. So I know Sharon very well. They are very very disciplined in their views. And as you said, they don't trade often, but when they trade, they trade with high conviction, and they trade in size, and they have mythical mathematical models which give them a signal and you know, until they get to a sweet spot, perfect environment to go longer short a

bull er bear ETF. You know, they're sort of hands off and it's really worked out for them because they have called a lot of the crack trends, so they've they've been doing a great job. So now that we're kind of closing here, let's have a little fun here. One of the things with leverage ETFs that rules is the tickers. I mean, every time they have a new one, the tickers are amazing. I mean there are home runs every time. So recently you had talk and mute t A w K and mute. That's going to be three

x communications and three x bear communications. Want and need are good, Ying and yang, dig and doug, drip and gush. What's that one for? What are those four oil, chiff and gush? Yeah, they're they're three x SMP oil and energy ETF. There you go. Cure and sick is six little round that close sick, sick up the flu. Only cure survives. So good ticker. Great band reminds me of the band the Cure. Yeah, actually a great trade now too? How many how many of those tickers can you take

credit for? You know? I the tickers that I come up with are terrible, So I can't really, guys can't. Really. It's the staff. We we send emails around, we argue about it. Really, Yeah, we we have different opinions on it, but I have to say it's it's more or less our trading desk that comes up with the great you know, if there's ever a round table meeting that we can be flies on the wall for. Yeah, well, are there any tickers that were on the cutting room floor that

that are just interesting or should have made it? I mean for the healthcare one of the one of the names we have lab you and lab D that's three X biotech and you know, rat and rats was on the table for a while, but then we thought, you know, that gets into some animal treatment issues and yeah, we try to be careful. Sounds like because they're fun, but they're not over the PC linel be careful. Yeah, Rat

would would definitely speak to that. I think. So how often will you sit on a ticker that you like even though you don't have that product yet? So we filed for a whole bunch of products, and you know, we do reserve tickers along the way. So it's you know, when we have an idea that we think is absolutely brilliant, will do it. And a lot of et F providers do that actually, so, yeah, there's a lot reserved. It's

the whole thing. I've heard that they trade tickers. Now that you have on loan or that you've reserved, you can actually like go find the person and make an offer or something. Yeah, right right, And if you have a product that another et F provider would like to launch and use your product for an underlying you know, they might kind of bait you with, hey, we have

this great idea. So and you know when you talk about new launches, I do find sometimes, you know, when e t F has arrived, when there's a three X version, like I think cybersecurity. Do you have a three x cybersecurity now? Yeah? But I'll give you an even better example than that. We have, um you bought which exactly and that e t F. It was sort of we launched it. It was admittedly a bit sleepy, but I

just I absolutely love this idea. I think it's the way of the future, right, Robotics and and AI and you know, bots really started to crush it. And and we had, you know, prior to all this China stuff that e t F was up close to a and still up about thirty year a date. But you Bought has really picked up and steam with a UM and trading and you know it's on the map because it's it's popular and topical. But yeah, it hit its shride. You know, we talked about ques being like the sun

in this sort of like mini solar system. That's the three X leverage is like something that else would there would orbit a hit E t F usually and then you bought sends some volume assets and interest to the underlying as well, so uh that it all feeds into that main body. But first you've got to get the assets, like I think robo and bots together hit five billion, and then you start to see options on them, the three x E t F s launching UM, et cetera, and then copycats and then all of a sudden you

got a whole new category that just was born. Yeah, and on the flip side, there's so many good ideas out there right now, Like I'm a big enthusiast in the office and we have to launch this. Look at this idea. It's so cool and whatever. But you know, there are some regulatory hurdles too. So within the case of bots, we had to wait for it to get big enough in order for us to be able to launch the three x CTF prot but there are some awesome ideas out there right now they're too small, not

liquid enough, but will someday be three extremes? And um, you know, some people would ask me like, is there ever going to be a four x E t F? And there was a filing by a company called four Shares, what a great name for four x and they filed for four x S and P I believe, but the SEC initially said okay, but then they rescinded. I think there was a mini freak out in social media on it, and uh, I don't think the s SEC one of

the pr issue around that. But do you know anything about the four shares or four x or would you ever do that if you could? Well, I look, there's there's a lot of leverage in the environment, right features or ten x mortgages on your house or are you know, essentially leverage and it's more in its purest form, So I think that leverage in the ecosystem is generally good. Um, you know, the reason we stopped at three is because

we thought that it's probably not going to happen. But if there was a thirty percent move in an underlying index and you know it's stuck. It could wipe out a fund. So when you talk about moving a day, we started to worry that, okay, that could actually you know, that could actually happen. So that would really be my you know, my sort of reserve on launching four X

and and more. But I think, you know, for the regulators, it's it's smart about product structure, you know, where they want to kind of draw the lines, and you know, I'm not sure what their final final thoughts on it are, but it didn't launch though. Four X, S and P wouldn't even rank in the top fifty of volatility though, because the SMP probably would never go down of a day, and if it did, society would have more problems than the four shares. Yeah. Absolutely, but I think I think

it's let's start with SMP. Well, why don't we make right you know, yeah, it's open. Yeah, absolutely, And also again I think that there's just the PR worry. You know, what's the sec level. You know, Sylvia, thanks for joining tricks, Thank you for having me, Thanks for listening to trillions. Until next time, you can find us on the Bloomberg terminal, Umberg dot com, Apple podcasts, Spotify, and wherever else you

like to Elisa, we'd love to hear from you. We're on Twitter, I'm at Joel Webber Show, He's at Eric Calltunist, and you can find Sylvia and Direction at Direction L E T S. That's Direction with an X trillions is produced by Magnus Hendrickson. Francesca Levie is the head of Bloomberg podcast. Bye.