Ripple is expanding into the business of financing leveraged stock exchange-traded funds, a market long dominated by major banks and securities firms. The company's prime brokerage division, Ripple Prime, is supplying financing for funds that let investors amplify daily moves in individual stocks and market indexes.
Ripple entered this business through its $1.25 billion acquisition of Hidden Road, a multi-asset prime brokerage firm, in October 2025. The deal gave Ripple an established operation that clears trades, finances investment positions and handles transactions across stocks, bonds, currencies and digital assets.
How the Financing Works
Instead of purchasing twice its assets in shares of a stock, a fund can enter into a financial contract called a total return swap. A broker provides the exposure, typically hedging its own risk through stock purchases or other trades, while collecting a financing fee from the fund.
For example, the Tradr 2X Long SNDK Daily ETF, which targets twice the daily movement of memory-chip maker Sandisk, pays Ripple the overnight bank funding rate plus four percentage points. That puts the annualized financing rate at roughly 8% at prevailing rates, charged on the swap exposure and separate from the ETF's management fee.
Market Size and Competition
The U.S. leveraged ETF market now holds more than $256 billion across 593 funds, including 426 funds tracking individual stocks, according to Morningstar Direct data. Banks have traditionally supplied much of this financing, but tighter capital and risk requirements have created openings for nonbank firms including Ripple Prime, Jane Street and Clear Street.
Ripple launched its Delta One business in August, offering total return swaps tied to U.S. stocks, market indexes and digital assets. The company said at the time the operation had more than $1 billion in regulatory net capital and completed a $275 million senior debt offering to help finance further growth.
Business Expansion and Risks
Ripple Prime announced an expanded agreement with hedge fund manager Brevan Howard, under which it will provide brokerage, clearing and financing services across multiple asset classes.
The leveraged ETF financing business generates fee income tied to stock trading and institutional financing. However, the business carries risks because sharp moves in individual stocks can leave financing firms exposed to losses if a fund's assets are insufficient to cover losses. Leveraged ETFs reset their exposure daily, which can amplify this risk.
