Ripple is expanding its prime brokerage business into financing leveraged stock exchange-traded funds, entering a market traditionally dominated by major banks and securities firms. Through Ripple Prime, the company is providing financing for funds that seek to amplify the daily moves of individual stocks and market indexes.
Ripple entered the business through its $1.25 billion acquisition of Hidden Road in October 2025. The deal gave Ripple an established multi-asset prime brokerage operation that clears trades, finances investment positions and processes transactions across stocks, bonds, currencies and digital assets.
The financing model allows leveraged ETFs to obtain amplified market exposure without purchasing the full amount of underlying shares. For example, a fund targeting twice the daily return of Nvidia can use a total return swap, with a broker providing the exposure and typically hedging its own risk through stock purchases or other trades while charging the fund a financing fee.
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, according to the Wall Street Journal report. At prevailing rates, that puts the annualized financing cost at roughly 8% on the swap exposure, separate from the ETF's management fee.
The scale of the leveraged ETF market gives the business a significant potential financing base. Morningstar Direct data shows that the U.S. market has 593 leveraged ETFs holding more than $256 billion, including 426 funds tracking individual stocks.
Banks have historically supplied much of the financing for this market, but tighter capital and risk requirements have created an opening for nonbank firms such as Ripple Prime, Jane Street and Clear Street. Ripple's expansion therefore places its prime brokerage operation more directly alongside established institutional financing businesses.
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 that the operation had more than $1 billion in regulatory net capital, while a $275 million senior debt offering provided additional financing capacity for its growth.
The expansion is also extending Ripple Prime's institutional relationships. On Tuesday, Ripple announced an expanded agreement with hedge fund manager Brevan Howard under which Ripple Prime will provide brokerage, clearing and financing services across multiple asset classes.
Leveraged ETF financing carries its own risk because these funds reset their exposure daily. Sharp moves in individual stocks can increase the financing firm's exposure when a fund's assets are insufficient to cover losses, making risk management and hedging central to the business model.
For Ripple, the expansion creates a source of fee income linked directly to institutional stock trading and financing rather than cryptocurrency markets alone. However, the company has not disclosed how much revenue its leveraged ETF financing generates or how much of the activity involves XRP or the XRP Ledger, leaving the direct economic connection between the new business and Ripple's crypto ecosystem unclear.
