A highly scrutinized corner of the U.S. ETF market is escalating its push into ultra-short-term speculation.

Defiance ETFs has filed paperwork with the Securities and Exchange Commission to launch a series of leveraged funds designed to double the daily price swings of select individual stocks, but with a crucial twist: the leverage resets on an hourly basis rather than a daily one. Leveraged ETFs, once primarily used to amplify movements in broad market indexes, have increasingly utilized derivatives to let retail investors pile into popular stocks with outsized exposure. Defiance now aims to compress the time frame even further, introducing a product that re-calibrates its leverage multiple multiple times within a single trading session. According to the regulatory filing, the proposed funds will track some of the market's most sought-after technology names, including Meta Platforms Inc., Microsoft, Nvidia, Palantir Technologies Inc., and Tesla. The funds intend to maintain roughly two times the exposure of their underlying securities through swap or options contracts, rebalancing six times per trading day instead of just once at the close. If approved, these funds would use a time-weighted average price for each reset rather than a single closing price, as detailed in the filing.

To illustrate: a trader expecting a sharp move in Nvidia following a news catalyst could buy the fund during a specific hourly window, targeting double the stock's performance over that period rather than the full day's cumulative gain. Once the next hourly reset point arrives, a fresh two-times objective is established. For active traders, this means leverage is recalibrated closer to the moment of entry, while profits and losses compound repeatedly within the same trading day. Sylvia Jablonski, Chief Investment Officer at Defiance ETFs, explained the rationale: "This design offers investors a different way to express intraday views. Unlike pursuing double returns from today's close to tomorrow's close, our hourly reset product seeks to achieve the predetermined leverage multiple within a much shorter one-hour measurement period."

The filing arrives amid a heated regulatory debate over how far the ETF industry should be allowed to push such products. The SEC has recently slowed its review of proposals for three-times, four-times, and even five-times leveraged funds while simultaneously examining a wave of increasingly aggressive offerings. This controversy has also spread beyond U.S. borders. Over the summer, South Korean investors flooded into leveraged funds tied to SK Hynix and Samsung Electronics, only to face severe losses when the market turned sharply, triggering public outcry that reached the presidential level and prompting tighter regulations. Since then, South Korea's leveraged ETF frenzy has cooled significantly. After regulators required investors to complete five days of simulated trading before gaining access, demand for some of the country's most popular leveraged products dropped notably.

ETF issuers have consistently emphasized that these are trading vehicles, not traditional buy-and-hold investments. The hourly reset concept pushes that premise to a more extreme conclusion. Each round of gains or losses becomes the starting point for the next cycle, allowing returns to compound repeatedly within a single session. This mechanism proves profitable when a stock trends steadily upward, but in choppy or declining markets, the same compounding effect magnifies losses and intensifies volatility drag. ETF analyst James Seyffart expressed some skepticism about the innovation. "I'm not entirely convinced these new funds offer a truly differentiated exposure compared to daily-reset products," he noted, "unless the strategy is specifically targeting very narrow hourly windows around earnings releases or other major announcements."