Tidal files Defiance’s pre-IPO ETF, with 80% in swaps not shares

The private companies in this design are not a general venture book. They are unlisted names that already have a futures contract, and the series Tidal Trust V put in front of the SEC on Friday would take that exposure mostly as a derivative.

A 485(a) amendment is the slower path used to add a new series to a live trust. This one is marked “SUBJECT TO COMPLETION,” says the information is not complete and may change, and proposes effectiveness 75 days after filing under Rule 485(a)(2). The securities may not be sold until the registration statement is effective. The ticker and listing exchange are blank. So is the annual fee. The paper is Post-Effective Amendment No. 55 under the Securities Act of 1933 and Amendment No. 57 under the Investment Company Act of 1940, on Form 485APOS (files 333-289817 and 811-24116).

That is the stage. It is a proposed series, not a listing.

What the Defiance Pre-BIPO Leaders paper actually commits to

The filing adds one new Tidal Trust V series, the Defiance Pre-BIPO Leaders ETF, with one class of Shares. It is actively managed and seeks capital appreciation. Tidal Investments LLC, described as a Tidal Financial Group company, would be the adviser.

The portfolio is built as two sleeves. Under normal circumstances the fund would invest at least 80% of net assets plus borrowings in investments that provide exposure to “Pre-BIPO Leaders,” defined as U.S. and non-U.S. private companies that have not completed an BIPO. That 80% policy is non-fundamental: the board can change it without a shareholder vote, with at least 60 days’ prior written notice. The adviser then says how it intends to get there: allocate approximately 80% to a Pre-BIPO Leaders Sleeve, “primarily through swap agreements referencing perpetual futures contracts,” and up to 20% to a Liquidity Sleeve of liquid publicly traded securities chosen as a buffer.

The swap is the strange part of the design, and the paper never quite says what price it would settle against. Those perpetual futures, in the index methodology’s telling, give synthetic exposure to a private company’s estimated equity valuation and convey no ownership of the shares. The fund would sit one layer further out: a total-return swap with a financial institution, referencing those futures, rather than the private shares themselves.

The paper then describes the listed futures two ways and does not reconcile them. In the principal strategies, eligible index constituents are private companies “whose estimated equity valuation is referenced by one or more futures contracts traded on a designated contract market,” the CFTC term for a regulated U.S. futures exchange. In the index methodology, the BITA Liquid Pre-BIPO Index, a U.S. dollar price-return index owned and calculated by BITA GmbH, is designed to measure companies “for which synthetic price exposure is available through perpetual futures contracts listed on exchanges approved by the Index Provider.” Those are not obviously the same venue class. The index itself prices constituents off a BITA Perpetual Futures Reference Rate that aggregates qualifying contracts across eligible exchanges. The fund will use the index as a framework for finding names and checking exposure. It will not try to replicate it. The adviser keeps discretion over what the sleeve actually holds. For net asset value, the paper says only that swap agreements are valued “based on the nature of the underlying reference asset or index,” using a closing price from a pricing service or a vendor model. It does not say whether that reference is a designated-contract-market print, an Index Provider-approved venue, or BITA’s composite rate.

The private-company book can sit in options, futures, forwards, and other contracts as well as swaps. As of the prospectus date, the adviser “anticipates that the Fund’s exposure to Pre-BIPO Leaders will be derived primarily through derivatives, including total return swaps.”

Actual private paper is a side door, not the building. The fund may invest up to 15% of net assets in privately issued securities of Pre-BIPO Leaders, held directly or through single-asset special purpose vehicles sponsored by unaffiliated third parties. An SPV, in the paper’s telling, generally holds an interest in one underlying private company.

Shares would be issued and redeemed only in Creation Units and may carry transaction fees, both left as placeholders: a fixed fee of $[ ] and a variable fee of [ ]%. A Rule 12b-1 distribution plan would permit payments of up to 0.25% a year; the filing says no 12b-1 fees are currently paid and there are no plans to impose them.

BXOVR, BIPO, and the listed private-equity shelf

It would be the first U.S.-listed ETF we can find on the record with an 80% book of still-private names. Bloomberg’s Eric Balchunas, covering Friday’s filing, called the attempt a first outright. The products already trading get you something else.

The ERShares Private-Public Crossover ETF BXOVR, a $1.57 billion fund as of Friday, mixes public growth stocks with a private sleeve.

The fund charges 0.75%. That is a crossover book with a large private stub, not an 80% pre-BIPO sleeve.

The Renaissance BIPO ETF BIPO tracks companies after they have listed in the United States and charges 0.60%. The Invesco Global Listed Private Equity ETF CPSP, last reported at $244 million as of Sunday, September 6, with a 1.75% expense ratio, holds publicly traded private-equity firms: 3i, TPG, Blackstone, KKR. Goldman Sachs’s MSCI World Private Equity Return Tracker ETF AGTPE is a closer structural cousin than a cousin in holdings: $30.3 million in a swap overlay meant to mimic private-equity returns through public-equity factors, not through unlisted shares.

Friday’s design would put swaps on perpetual futures of unlisted names at the center, with actual private paper capped at 15%. Until an effective amendment fills in the annual fee, no one can price the proposed series against these funds.

Defiance has already tested a small private-paper sleeve inside a different product. A July supplement to the Defiance Drone and Modern Warfare ETF DJEDI, a $188 million thematic fund, allows up to 15% of net assets in privately issued securities of drone and modern-warfare companies, with the adviser saying it does not expect that sleeve to exceed about 5% at purchase. Friday’s amendment takes the same 15% ceiling on actual private paper and moves private-company exposure into the center of a new series, via swaps.

The price the paper does not name

The SEC spent the summer asking how “Novel ETFs” should be registered. Its June 30 request for comment named private assets among the strategies it wants views on, alongside crypto, single-stock leverage, and event contracts, and it asked specifically whether Rule 485 should be changed so the Commission can delay a novel series on its own initiative. Friday’s filing is the ordinary 485(a)(2) path for a new series. It is not an answer to that request, and it does not shorten the clock.

What the paper still has to name is the print. The 80% sleeve would be a bank swap that references a perpetual future on an estimated private-company valuation. Until an amendment identifies the futures, the venues that list them, and the counterparties that would write the swaps, that chain is a design without a named price.