This time, the regulators really saved the market. They directly rejected applications for those 3x and 5x leveraged ETFs—a decision that may seem conservative, but is actually very wise.

We looked through historical data, and in the past five years, the underlying assets for these proposed products experienced daily swings exceeding 33% on 350 occasions. What does that mean? If these high-leverage products had actually been launched, they would have triggered forced liquidations about once a week on average. And if a monster-level 5x leverage product had been approved, the frequency would be even higher.

The data doesn’t lie. Imagine a scenario where products are being liquidated every week—not only would investors suffer, but overall market confidence would be dragged down. Even those issuers who applied for 3x leverage should actually be thankful—if such products were really launched, the subsequent troubles and public backlash would be quite a headache for them.

Right now, the 2x leveraged single-stock ETFs on the market are already capable of creating wild volatility—there’s really no need to go further. Sometimes, not approving something is actually the best protection for everyone.