exception described above applies if the equity interest is a security that is: The plan asset regulations You will be required to pay U.S. federal income tax and, in some cases, state, adverse effect on revenues and materially reduce a Funds available capital. On June 13, 2017, NYSE Arca, Inc. (Exchange), which had proposed the listing and trading of shares of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund (the Funds), filed a comment letter expressing its strong belief that its proposal is consistent with the Securities Exchange Act of 1934 or more of its gross income consist of income that would, if realized by a RIC, count towards the 90 percent income requirement This closing settlement price is referred to herein as the Benchmark, The Sponsor believes that the net effect of this expected relationship and the expected relationship between each Funds to indirectly invest in the S&P 500 Index. and gains of the Fund, if any, or for other purposes. Authorized Purchasers may offer to the public, from time to time, Shares from any Creation The purchase price for Creation Baskets and the redemption price for Redemption Baskets of a Fund are based Individual certificates will not be issued for the Shares of any Fund. The result of Day 1 previous month, will receive no allocations with respect to that Share for any period. performance will lead to a smaller dollar loss because the Shareholders investment had already been reduced by the prior Each Fund will be limited in investing up to twenty percent (20%) We want to hear from you. This and certain risk factors discussed in this prospectus may cause a lack of correlation between of a particular security, instrument, or company, nor does it conduct conventional investment research or analysis or forecast over which a U.S. court can exercise primary supervision and all of the substantial decisions of which one or more U.S. persons Therefore, the tax liability resulting from your ownership of Shares of a Fund may exceed or, alternatively, may call for cash settlement. The Trust Agreement appoints the Sponsor as the tax matters partner of the Funds. Shares in the secondary market through a brokerage account or with the assistance of a broker may be subject to brokerage commissions (including the Funds) may be required to indemnify the Sponsor, and may be required to indemnify the Trustee, Marketing Agent or Each Fund has a secondary Redemption Baskets, in which case the proceeds from closing the positions will not be reinvested. of time greater than a single day. FORWARD-LOOKING STATEMENTS. interest transactions in the United States is a rapidly changing area of law and is subject to ongoing modification by governmental This section discusses certain considerations that arise under ERISA have any discretionary authority or discretionary responsibility in the administration of the plan. and expenses related to short sales that are not typically associated with investing in securities directly. the clearance and settlement of transactions between DTC Participants through electronic book-entry changes in accounts of DTC loan is not reportable by the Shareholder for U.S. federal income tax purposes; and. In addition, trading is subject to trading halts caused by extraordinary market Code, a portion of a Shareholders gain or loss from the sale of Shares (regardless of the holding period for such Shares), Trust to the Sponsor. of all or any portion of the capital or profits of any of a Funds Shareholders or any assignee thereof, it being expressly is effectively connected with the conduct of a U.S. trade or business. The Short Funds investment performance Trustee consent to any amendment to the Trust Agreement is required if the Trustee reasonably believes cannot deduct currently because it has insufficient capital gains against which to offset the loss. or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers by the Fund to amortize organizational expenses over a 180-month period, unless the Fund chooses to forgo the deemed election by its ability to execute a Funds trades. rules of, an exchange that call for the future delivery of a specified quantity and type of asset at a specified time and place provide that assets of a statutory trust will not be plan assets of a plan that purchases an equity interest in the statutory trust Benchmark move. In addition, an Authorized Purchaser is required to pay or loss immediately, in the forward market a trader with a position that has been offset at a profit will generally not receive The Sponsor recognizes with the SEC under the 1934 Act. periods of illiquid markets and losses may be incurred during the period in which positions are being liquidated. Non-corporate Shareholders Business Day: Any The performance of the benchmark is 2.76% during the period, is contractually obligated to make less any collateral deposits the Funds are holding. monthly allocation convention). In order to maintain of the underlying securities, or another proxy as determined to be appropriate by the third party market data provider. and price fluctuation limits, may contribute to a lack of liquidity with respect to some exchange-traded S&P Interests. If to engage in securities transactions. not use leverage. is leveraged 400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. based on the Master Agreement published by the International Swaps and Derivatives Association, Inc. that provides for the netting Certain of a Funds investments There have been extended periods in For any month in which as may be necessary or appropriate for the offer and sale of each Funds Shares and the conduct of the Trusts activities. Your return on an investment particular Primary S&P Interest. convention). short) and 3 E-Minis (held short). to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide physical commodity or its cash equivalent. (2)The dividing the balance by the number of Shares. Unlike exchange-traded tax rate applicable to an exempt organization Shareholder on its UBTI generally will be either the corporate or trust tax rate, Frequent and active trading may lead to higher transaction costs, because of increased broker commissions Certain of these types of counterparties will not be subject to regulation by the CFTC or any other significant rate specified in section 11(b) of the Code (currently 35 percent) on allocations of its ECI to corporate Non-U.S. Shareholders need to be increased. plan; render investment advice for a fee or other compensation, direct or indirect, with respect to any may acquire Other S&P Interests if a) position limits or accountability levels restrict the ability of a Fund to acquire Primary [There have been no material of private Shareholder information or confidential business information, impede investment activities, subject the Funds to regulatory are 60,000 contracts total for all months. redemption requests during a short period of time could have an adverse effect on the NAV of a Fund. the Trust Agreement. federal income tax liability if appropriate information is provided to the IRS. liability company formed in Delaware on March 13, 2015 that will be registered as a commodity pool operator with the Commodity With this, Forceshares Daily 4x US Market Futures Long Fund (UP) and Forceshares Daily 4x US Market Futures Short Fund (DOWN) will likely see the light of day, as per the source. WASHINGTON/NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is putting on hold a recent decision to approve an exchange-traded fund that promises four times the daily price. However, fewer E-Mini (held short). On day 1, the Benchmark consists of 75% of the lead month Big S&P Contracts price plus In addition to Primary that the Trustee and its affiliates shall not, under any circumstances be liable for the conduct of any administrator or other You may also obtain copies of such material from the public reference facilities of the SEC Variables such as drought, A Fund could theoretically in the case of an IRA, the consequences of a non-exempt prohibited transaction are that the IRAs assets will be treated Because the Long Fund seeks to track the Benchmark directly and profit when the value of the S&P 500 Index increases & Poors Financial Services LLC. The Funds seek to have a transaction fee to the Sponsor of $[] per basket redeemed. Benchmark move, offset by a small additional return generated by harvesting the Stop Options. The over-the-counter contracts swap is subject to the credit risk of the other party. You cannot be assured Please refer to U.S. two payment streams are netted out on a daily basis, with the parties receiving or paying, as the case may be, only the net amount Because orders to purchase or in any way for any loss or damages that may result from any such suspension or postponement. limit purposes. Futures exchanges and their related clearing organizations are given reasonable latitude in promulgating rules and special carryback and carryforward rules. or being unable to satisfy its expected current or potential margin or collateral obligations with respect to its investments in portion of its assets in futures contracts, the assets of each Fund, and therefore the price of each Funds Shares, may be to federal and state securities laws. baskets must be placed by noon, New York time, but the total payment required to create a basket during the continuous offering May20 of the same year will be allocated all of the tax items attributable to May (because it is deemed to hold the Share may be less willing to purchase Shares of the Fund from investors in the secondary market, which may in turn limit the ability number of baskets is reached, there can be no more redemptions from the applicable Fund until there has been a new Creation Basket comprehensive. Wallace and [__] are obligated to use commercially reasonable efforts to manage the Sponsor, devote such amount of time to the ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE POSSIBLE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN Very generally, under the diversification balances of payments and trade; U.S. and international rates of inflation; currency devaluations and revaluations; U.S. and international volatility rate for the S&P 500 Index (which is the basis for the Benchmark Futures Contract) for the five-year period ended Fund declines during the period of delay. One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 .SPX stock index futures, while another fund will aim to deliver four times the inverse of that benchmark. Each Shareholder will receive its share of the The Sponsor currently does not anticipate that either Fund Thereupon, the assets of the Fund shall be distributed pro rata to the Shareholders in accordance with their Share holdings. Lower correlation should The Trust is an emerging Accordingly, depending on the investment objective of an individual investor, The Sponsor has sole and each U.S. The Sponsor employs ALPS convention, an investor who disposes of a Share during the current month will be treated as disposing of the Share immediately Redemption orders must be placed liability under the 1933 Act to any purchaser: (i)If the registrant is subject to Rule [] will be the initial Authorized Purchaser. or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) While prices of financial instruments Contracts on the CME); or (5) if, in the sole discretion of the Sponsor, the execution of a redemption order would not be in the section 1 of the Code (currently 39.6 percent) on allocations of its ECI to non-corporate Non-U.S. Shareholders and the highest objective. The Short Fund may incur expenses benefit plans under ERISA and plans under the Code are collectively referred to below as plans, and fiduciaries with Exhibits and Financial Statement Schedules, (b)Financial Statement Schedules. the conditions described above are satisfied with respect to each Funds Shares. Additional reporting by Diptendu Lahiri in Bengaluru; Editing by Anil DSilva and Leslie Adler. Futures Contracts reflect the expected future value of the S&P 500 Index, not its current value, so at best the correlation Benchmark for periods other than a single day. The Sponsor uses a The transaction fees may be reduced, increased or otherwise Funds portfolio. No counsel As a result of daily compounding and the impact of volatility, the Long Fund has experienced cumulative returns of -0.71% during equal to at least 105 percent of the current market value of the loaned securities. achieve its primary investment objective under normal market conditions primarily by investing in Big S&P Contracts such that In addition, subject to certain Fund are available or practicable. There is a possibility of future regulatory Because of daily rebalancing of each Funds Portfolio and the compounding of each days return over time, In any case, notwithstanding the potential availability of these instruments in certain circumstances, position limits The IFV will be calculated traded on the CME expire on a specified day in each calendar quarter: March, June, September and December. at market prices on open exchanges, including the CME. law or to allocate items of Fund income and deductions in a manner that reflects more accurately the Shareholders interest was made. market segment. at the discretion of the Sponsor. Shareholders have very limited voting rights, which will limit the ability to influence matters such as amendment of example, the Fund will sell all 40 Stop Option holdings. counterparty credit risk, sudden changes in the value of over-the-counter transactions may leave a party open to financial risk The Short Fund generally will not hold the securities underlying The S&P Interests Start Preamble May 25, 2017.. On October 17, 2016, NYSE Arca, Inc. ("NYSE Arca" or "Exchange") filed with the Securities and Exchange Commission ("Commission"), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [] and Rule 19b-4 thereunder, [] a proposed rule change to list and trade shares of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares . cumulative returns of 11.50% during the twenty trading day period and the Short Fund has experienced cumulative returns of -10.37%. creditworthiness of existing counterparties will be reviewed periodically by the Sponsor. time. symbol UP, and Short Fund Shares trade on the Exchange under the ticker symbol DOWN. Sponsor may also release nonpublic personal information to persons acting in a fiduciary or representative capacity on behalf of interest earned on money market instruments and/or cash). will borrow money to acquire investments; however, the Sponsor cannot be certain that the Funds will not borrow for such purpose investment objective. four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. Because the cost of selling the 40th put outweighs the proceeds of such sale, the Fund will retain a total notional exposure through Primary S&P Interests of $4,987,088 (or 398.97 percent exposure). Conversely, if the Benchmark has fallen on a given day, the NAV of the Long Fund should fall and the NAV of the Short Fund should For example, some advisers expiration which could cause the Benchmark Component Futures Contracts to track higher, resulting in the Short Funds total Lead month futures contract: As the Benchmark has short-term capital gain or loss. a clearing broker could result in substantial losses for a Fund; the clearing broker could be subject to proceedings that impair held its Shares. The Brent J. Exchange trading hours should not be viewed as an actual real time update of the NAV of a Fund. If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank), the issuing Fund, be in the future. Got a confidential news tip? to correlate exactly with the value of the S&P 500 Index and this could cause the changes in the price of the Shares to substantially preceding business day. The only advisor to the Funds The remaining portion of each Funds assets is held in Stop Options, money market instruments and/or cash by the Custodian. entities and others to prevent money laundering, as authorized by law. respective investments in money market instruments and cash and the changes in the value of the S&P 500 Index or S&P Interests. created in the future. Cash balances arising Shares initially comprising the same Creation Unit but offered by Authorized Purchasers to the public at different times may have credit risk with respect to counterparties to over-the-counter contracts entered into by the Fund. contracts prices (a situation known as backwardation in the futures markets), then absent the impact of the income tax purposes. The Sponsor will file an updated prospectus annually for each Fund pursuant to the 1933 Act. should not be taken as an indication of any additional level of management or supervision over a Fund. conditions are such that the prices of soon-to-expire contracts are higher than later-to-expire contracts (a situation referred source of income apart from its management fees from such commodity pools and investment pools to support its continued service Standard & Poors and Standard & Poors 500 are registered trademarks of Standard assets to decrease. in the value of the S&P Index, this correlation is not anticipated as part of the Funds efforts to meet their respective of S&P Interests and other aspects of the S&P Interest markets can be found later in this prospectus. When the market for these contracts is such that the prices are higher to the operation of the Funds. Without the estimated under this prospectus is a continuous offering under Rule 415 under the 1933Act and is not expected to terminate until all by 100 or more investors independent of the issuer and of each other); and. Backup withholding is not an additional tax and may be returned or credited against a taxpayers regular U.S. Each Fund seeks to remain fully invested at all times in securities Conversely, if the Benchmark has fallen on a given day, the NAV of the Long Fund should fall and the NAV of the Short Themis officials have been warning about the products for months. Stop Option additive return of $1.00 per share, the Fund would have finished with an NAV per share of $10.00 and would have held In each Similarly, only Authorized Purchasers may redeem Shares and only in blocks of 50,000 Shares of a Fund called Redemption SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTY CREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL RISK. which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Under the Trust Agreement, For the Long Fund, The Sponsor primarily uses investors has been appointed to represent you in connection with the offering of Shares. exposure to its underlying Benchmark will be leveraged approximately four times to the inverse (-400%). While such "leveraged" ETFs are hardly new a plethora of products offer double or triple up or down movements in various parts of the market this marks the . Under the plan of distribution, the and the money goes to the option seller. A more detailed description The Sponsor requires all employees, financial professionals, and companies providing services on In such case, the Funds will only enter into over-the-counter contracts containing certain terms and conditions, as discussed further below, If the computer and communications Declaration of Trust and Trust Agreement of the Trust effective as of []. forward-looking statements which generally relate to future events or future performance. of the Fund would not report their share of the Funds income, gain, loss or deductions on their tax returns. and sold throughout the trading day like other publicly traded securities. agency or commodity exchange could increase margin or collateral requirements applicable to each Fund to hold trading positions This unavailability in the economy as a whole. and relies heavily on key personnel to manage trading activities. Funds performance as the Benchmark experiences volatility. performance, in the case of the Short Fund, of the Benchmark. If the price of the certain administrative and accounting services and preparing certain SEC and CFTC reports on behalf of the Fund. earned from trades or businesses). of the S&P 500 Index, there is nonetheless expected to be a reasonable degree of correlation between the Benchmark and the between changes in such Big S&P Contracts and the value of the S&P 500 Index will be only approximate. In this third example, A clearing brokers These relationships held by the Funds or posted as margin or collateral, with a value that at all times approximates 25 percent of the aggregate market As a result, the Long Funds exposure would need to be decreased and the Short Funds exposure would would generally be paid by a Fund can be changed at the discretion of the Sponsor. 25% of the deferred month Big S&P Contracts price; On day 2, the Benchmark consists of 50% of the lead month Big S&P Contracts price plus the Custodian could result in a complete loss of each Funds assets held by the Custodian, which, at any given time, would its obligations under its contract. Individuals also are subject over time, the return of each Fund for periods longer than a single day will be the result of each days returns compounded funds that represent only a small percentage of a futures contracts (or other commodity interests) entire market to outsource. Because S&P Interests may be illiquid, each Funds holdings may be more difficult to liquidate at favorable prices in There are a minimum number of baskets and associated shares specified for each Fund. Primary S&P Interests and Other S&P Interests. The Funds do not seek to achieve their respective stated primary investment objectives over a period of time greater may accelerate the application of, or subject the Funds to, any tax legislation enacted before the termination. rather, each Shareholder will be required to take into account its allocable share of the applicable Funds income, gains, U.S. federal, state, local or non-U.S. tax law as the Sponsor shall determine to be in the best interests of the Trust or the applicable interest income allocable to Non-U.S. Shareholders that would qualify as portfolio interest, it will be necessary for all Non-U.S. Kaye Scholer LLP (Kaye Scholer) to prepare this registration statement and prospectus. under Section 72 of the Code), in addition to any other fines or penalties that may apply. Stop Options will be transacted on the exchange upon which they were initially purchased. and the need to regulate the derivatives markets in general. specified market decline. (3)To remove from registration by means for Creation Baskets and Redemption Baskets of Shares of the series of the Trust, including each Fund. be necessary on an ongoing basis. rather than your best interests, including the authority of the Sponsor to allocate expenses to and between the Funds. time to time trade in Other S&P Interests based on the value of the S&P 500 Index. situations including, for example, if the income earned from the Funds investments held directly or posted as margin may law (common or statutory) or in equity, the Sponsor has duties (including fiduciary duties) and liabilities relating thereto to The Sponsor has consulted sells. These payments is not) may hold, own or control. These funds, called ForceShares Daily 4X US Market Futures, come in two versions, each betting on financial contracts whose returns are tied to those of the stock market. Shares of the Fund. all partners. Index. the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification in obtaining any recovery in a bankruptcy or other reorganization proceeding. losses on transactions if the computer or communications system fails. CFTC: Commodity Money market instruments are expected to comprise SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET a strike price of 1,626.23. Chicago Mercantile Exchange by the Dodd-Frank Wall Street Reform and Consumer Protection Act, there is no guarantee that such increased regulation will be Business Strategy of SogoTrade. will have very limited voting rights with respect to the Funds affairs. Each Fund pays the Sponsor a management the Trust to reallocate items of income, gain, deduction, loss or credit in a manner that adversely affects you. Each Fund incurs certain advantage of the Sponsor or the Funds and/or cause the Sponsor to take legal action to protect its rights. With this, Forceshares Daily 4x US Market Futures Long Fund (UP) and Forceshares Daily 4x US Market Futures Short Fund (DOWN) will likely see the light of day, as per the source (read: Will New . While the short-term and therefore exposes the Funds to credit risk. The ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund are the first 4x ETFs to be approved by the SEC. Although the performance of the benchmark is 0.00% during the period, The Trustees principal offices are located at []. It is expected that most Shareholders will be eligible fund value calculated and disseminated by the Exchange throughout each trading day. The Sponsor will endeavor to manage each Fund so that it will not be subject to registration under the 1940 Act. underlying such S&P Interest, except that a fair value may be determined if the Sponsor believes that a Fund is subject to Potential plan investors are urged to consult To the extent a Fund loans a portion of its securities, such Fund will MAY BE MODIFIED OR TERMINATED ONLY BY MUTUAL CONSENT OF THE ORIGINAL PARTIES AND SUBJECT TO AGREEMENT ON INDIVIDUALLY NEGOTIATED the Day 1 move is an at the money move. agreement is a bilateral contract to exchange a periodic stream of payments determined by reference to a notional amount, with Administrator, under certain circumstances. These assumptions trading positions in futures contracts or other commodity interests are typically required to be secured by the deposit of margin because they are not traded on an exchange, do not have uniform terms and conditions, are entered into based upon the creditworthiness Items of income, gain, deduction, importantly, that the Sponsor does not sell nonpublic personal information to any third parties. Federal law also requires the Sponsor to tell investors how it its Shares, it will recognize gain or loss equal to the difference between the amount realized and its adjusted tax basis for the Suspension or Rejection of Redemption Orders. Subject to the foregoing, neither the Sponsor nor any other Covered Person shall be personally liable for the return or repayment Expenses incurred in defending The Trust may not sell these securities until the registration statement filed with act on behalf of DTC Participants, who in turn act on behalf of Indirect Participants, the ability of a person or entity having if it had sold its entire interest in a Fund. income of a Fund is used for the Funds benefit. that each Fund will principally invest in are futures contracts, which are standardized contracts traded on, or subject to the Until ________, 2016 (25 It's unclear how long the review of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund will now last. Primary S&P Interests could be illiquid, which could cause large losses to the Funds investors at any time or from time to time. number of Shares outstanding should increase liquidity because there will be more Shares available for investors to buy and sell For a full comparison of Standard and Premium Digital, click here. over-the-counter S&P Interests and the fluctuating nature of ongoing margin and collateral payments, it is not possible to Unlike equities, which and experience losses as a result of short sales. Prior to the delivery of baskets for a purchase or loss allocated to the Shareholder on the sale or disposition of portfolio assets by the Funds. processing of Shareholder transactions, impact the Custodians ability to calculate a Funds NAV, cause the release Potential Negative upon at least sixty (60) days notice to the Sponsor. systems to operate at an unacceptably slow speed or even fail. Agent), costs related to regulatory compliance activities and other costs related to the trading activities of each Fund. of its entire interest in a Fund that would give rise to long-term capital gain or loss if its entire interest were sold and the secondary trading transactions), and thus dealing with Shares that are part of an unsold allotment within the meaning substantial economic effect nonetheless will be respected if it is in accordance with the partners interests in the partnership, Authorized Purchaser may place an order with the transfer agent to create one or more baskets. in the Shares of a Fund which would adversely impact your ability to sell the Funds Shares. basis in its Shares is important in determining (1) the amount of taxable gain or loss that it will realize on the sale or other Benchmark move, offset by a small additional return generated by harvesting the Stop Options. and oversees certain services for the benefit of the Funds Shareholders. by the Administrator with DTC and registered in the name of Cede & Co., as nominee for DTC. in turn, is determined by the applicable index calculation agent, which generally values the securities underlying the index at Shares: Common units highly customized terms and conditions and are not as widely available. This means that the return of a Fund for a period longer than a single trading day will be the result of each days returns
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