SEC Comment Letter 0000000000-25-011189 to Tidal Trust II (CIK 0001924868)
Tidal Trust II (CIK 0001924868)
Date: Dec. 2, 2025 · CIK: 0001924868 · Accession: 0000000000-25-011189
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-264478, 811-23793
Letter
December 2, 2025 VIA E-MAIL Michael Pellegrino General Counsel Tidal Investments LLC mpellegrino@tidalfg.com
Re: Tidal Trust II Post-Effective Amendment on Form N-1A File Nos. 333-264478, 811-23793
Dear Mr. Pellegrino:
We write to express concern regarding the registration of exchange-traded funds that seek to provide more than 200% (2x) leveraged exposure to underlying indices or securities. On June 3, 2025, July 9, 2025, and August 11, 2025, Tidal Trust II filed post-effective amendments on Form N-1A to add the series referenced in Appendix A attached hereto.
We will not perform further substantive review of these filings referenced in Appendix A until the issues raised in this letter are addressed. Further, we request that in your response letter you undertake to delay the effectiveness of the filing until these issues are resolved.
Rule 18f-4 under the Investment Company Act of 1940
Rule 18f-4 limits fund leverage risk by requiring that an open-end fund s Value-at-Risk (VaR) does not exceed 200% of the VaR of a designated reference portfolio. 1 The fund s designated reference portfolio provides the unleveraged baseline against which to compare the fund s leveraged portfolio for purposes of identifying the fund s leverage risk under the rule.
Rule 18f-4(c)(2). In circumstances not relevant here, a fund can satisfy a different test in the rule based on absolute VaR, rather than relative VaR. Michael Pellegrino Page 2 of 3
Accordingly, in defining the term designated reference portfolio, rule 18f-4 provides that, if the fund s investment objective and strategy is to track the performance (including a leverage multiple or inverse multiple) of an unleveraged index, the fund must use that index as its designated reference portfolio. 2 As the Commission observed in adopting this requirement, where a fund tracks an index, that index will provide the most appropriate reference portfolio for a relative VaR test.
Each fund in the registrant s fund complex identified in Appendix A has an objective and strategy to track the performance, including a leverage multiple or inverse multiple, of an unleveraged index because each fund seeks to provide a leverage or inverse multiple of the return of one or more specific securities. Each fund therefore must use the security or securities that it tracks (collectively, the fund s reference assets ) as the fund s designated reference portfolio for purposes of the VaR test required by rule 18f-4. Whether the fund identifies the securities (or security) it tracks by their individual names or as an index does not change this conclusion.
Because each of these funds has an objective and strategy to provide a leverage multiple or inverse multiple of the return of the fund s reference assets, each fund s reference assets provide the precise representation of the fund s unleveraged portfolio and therefore the appropriate baseline to calculate the fund s leverage risk under the rule. Accordingly, we question how the fund s derivatives risk manager could reasonably determine to use a baseline other than the reference assets and how the funds directors, as fiduciaries, would be satisfied with the manager s choice.
* * *
We request the registrant revise its objective and strategy to be consistent with rule 18f-4, as discussed above, or withdraw its filings. A response to this letter should be in the form of a supplemental correspondence filed on EDGAR. We remind you that the fund and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action, or absence of action by the staff.
Should you have any questions regarding this letter, please feel free to contact us at (202) 551- 6921.
Sincerely,
Division
of Investment Management
Show Raw Text
<DOCUMENT> <TYPE>TEXT-EXTRACT <SEQUENCE>2 <FILENAME>filename2.txt <TEXT> December 2, 2025 VIA E-MAIL Michael Pellegrino General Counsel Tidal Investments LLC mpellegrino@tidalfg.com Re: Tidal Trust II Post-Effective Amendment on Form N-1A File Nos. 333-264478, 811-23793 Dear Mr. Pellegrino: We write to express concern regarding the registration of exchange-traded funds that seek to provide more than 200% (2x) leveraged exposure to underlying indices or securities. On June 3, 2025, July 9, 2025, and August 11, 2025, Tidal Trust II filed post-effective amendments on Form N-1A to add the series referenced in Appendix A attached hereto. We will not perform further substantive review of these filings referenced in Appendix A until the issues raised in this letter are addressed. Further, we request that in your response letter you undertake to delay the effectiveness of the filing until these issues are resolved. Rule 18f-4 under the Investment Company Act of 1940 Rule 18f-4 limits fund leverage risk by requiring that an open-end fund s Value-at-Risk (VaR) does not exceed 200% of the VaR of a designated reference portfolio. 1 The fund s designated reference portfolio provides the unleveraged baseline against which to compare the fund s leveraged portfolio for purposes of identifying the fund s leverage risk under the rule. 1 Rule 18f-4(c)(2). In circumstances not relevant here, a fund can satisfy a different test in the rule based on absolute VaR, rather than relative VaR. Michael Pellegrino Page 2 of 3 Accordingly, in defining the term designated reference portfolio, rule 18f-4 provides that, if the fund s investment objective and strategy is to track the performance (including a leverage multiple or inverse multiple) of an unleveraged index, the fund must use that index as its designated reference portfolio. 2 As the Commission observed in adopting this requirement, where a fund tracks an index, that index will provide the most appropriate reference portfolio for a relative VaR test. Each fund in the registrant s fund complex identified in Appendix A has an objective and strategy to track the performance, including a leverage multiple or inverse multiple, of an unleveraged index because each fund seeks to provide a leverage or inverse multiple of the return of one or more specific securities. Each fund therefore must use the security or securities that it tracks (collectively, the fund s reference assets ) as the fund s designated reference portfolio for purposes of the VaR test required by rule 18f-4. Whether the fund identifies the securities (or security) it tracks by their individual names or as an index does not change this conclusion. Because each of these funds has an objective and strategy to provide a leverage multiple or inverse multiple of the return of the fund s reference assets, each fund s reference assets provide the precise representation of the fund s unleveraged portfolio and therefore the appropriate baseline to calculate the fund s leverage risk under the rule. Accordingly, we question how the fund s derivatives risk manager could reasonably determine to use a baseline other than the reference assets and how the funds directors, as fiduciaries, would be satisfied with the manager s choice. * * * We request the registrant revise its objective and strategy to be consistent with rule 18f-4, as discussed above, or withdraw its filings. A response to this letter should be in the form of a supplemental correspondence filed on EDGAR. We remind you that the fund and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action, or absence of action by the staff. Should you have any questions regarding this letter, please feel free to contact us at (202) 551- 6921. Sincerely, Division of Investment Management 2 Rule 18f-4(a) (defining the term Designated reference portfolio ). Appendix A 33 Act Accession No Fund Registrant Filing Date Series Names Complex 333- 0001999371- LevMax Tidal Trust 06/03/2025 LevMax AMZN [Monthly 3x1] ETF ([Ticker]) 264478 25-007089 II LevMax Bitcoin [Monthly 3x1] ETF ([Ticker]) LevMax BRK-B [Monthly 3x1] ETF ([Ticker]) LevMax COIN [Monthly 3x1] ETF ([Ticker]) LevMax HOOD [Monthly 3x1] ETF ([Ticker]) LevMax MSFT [Monthly 3x1] ETF ([Ticker]) LevMax MSTR [Monthly 3x1] ETF ([Ticker]) LevMax NVDA [Monthly 3x1] ETF ([Ticker]) LevMax PLTR [Monthly 3x1] ETF ([Ticker]) LevMax RDDT [Monthly 3x1] ETF ([Ticker]) LevMax SMCI [Monthly 3x1] ETF ([Ticker]) LevMax TSLA [Monthly 3x1] ETF ([Ticker]) 333- 0001999371- Quantify Tidal Trust 07/09/2025 STKd 150% COIN & 150% NVDA ETF 26447 25-008833 Funds II STKd 150% NVDA & 150% MSTR ETF STKd 150% MSTR & 150% COIN ETF STKd 150% COIN & 150% HOOD ETF STKd 150% NVDA & 150% AMD ETF STKd 150% TSLA & 150% MSTR ETF STKd 150% TSLA & 150% NVDA ETF STKd 150% SMCI & 150% NVDA ETF STKd 150% UBER & 150% TSLA ETF STKd 150% META & 150% AMZN ETF 333- 0001999371- Defiance Tidal Trust 08/11/2025 Defiance Hot Sauce Daily 3X Strategy ETF (HOT) 264478 25-011017 II </TEXT> </DOCUMENT>