Nearly 130 Single-Stock Filings Pulled After SEC Remarks

Three fund managers withdrew filings in September for nearly 130 single-stock exchange-traded funds after the Securities and Exchange Commission warned such products pose high risk to investors. 

Kelly Intelligence, Roundhill Investments and Tema Global Ltd. retracted applications for their exchange-traded funds, providing little to no explanation on the filed amendments. The listed ETFs aimed to give exposure to foreign companies that were not tethered to U.S. exchanges, such as Airbus, Mercedes Benz and LVMH. 

Kelly’s revised filing said it “has elected not to proceed with the registration process for the new series,” and Roundhill’s alteration was along similar lines, stating “the Trust has determined not to proceed with the offerings of these series.” Less than a week after these issuers scrapped the plans, Tema followed suit and simply crossed out the ETFs referenced in its filing. 

The SEC and Kelly Intelligence declined to comment. Roundhill Investments and Tema Global did not respond to a request for comment.  

The move comes months after the SEC expressed its concern about single-stock levered and inverse ETFs.  

“Because levered single-stock ETFs in particular amplify the effect of price movements of the underlying individual stocks, investors holding these funds will experience even greater volatility and risk than investors who hold the underlying stock itself,” said Lori Schock, director of the SEC’s office of investor education and advocacy, in a statement issued in July. 

“Though these products will be listed and traded on an exchange, they are not right for every investor,” she added. 

Although the warning was directed toward investors and issuers based in the U.S., single-stock ETFs giving exposure to non-U.S. companies come with similar risks. 

Contact Zoya Mirza at [email protected]