Company: EUO
Filing Date: 2025-02-13
Form Type: S-3
Source: 0001193125-25-026201
Chunk: 61

Company: ProShares Trust II
Filing Date: 2025-02-13
Form: S-3
Chunk 61
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 many derivatives contracts, such as swap agreements, terms that delay or restrict the rights of counterparties, such as a Fund, to terminate such contracts, foreclose upon collateral, exercise other default rights or restrict transfers of credit support in the event that the counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. Similar regulations and laws have been adopted in the UK and the EU that apply to the Funds’ counterparties located in those jurisdictions. It is possible that these new requirements could adversely affect the Funds’ ability to terminate existing derivatives agreements or to realize amounts to be received under such agreements.

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CFTC rules do not apply to all of the physically settled forward contracts entered into by the Funds. Investors, therefore, may not receive the protection of CFTC regulation or the statutory scheme of the CEA in connection with each Fund’s physically settled forward contracts. The lack of regulation in these markets could expose investors to significant losses under certain circumstances, including in the event of trading abuses or financial failure by participants. Tariffs and/or other trade sanctions may be proposed, imposed or withdrawn by the U.S. at any time. Changes in U.S. trade policy have had, and may continue to have, an impact on certain commodities markets, particularly the markets for natural gas and oil, commodity futures markets, including futures on natural gas and oil, and the prices of ProShares Ultra Bloomberg Natural Gas and ProShares UltraShort Bloomberg Natural Gas (the Natural Gas Funds) and ProShares Ultra Bloomberg Crude Oil and the ProShares UltraShort Bloomberg Crude Oil (the Oil Funds). The Natural Gas Funds and the Oil Funds are offered under different prospectuses. Regulatory and exchange daily price limits, position limits and accountability levels may have a negative impact on the operation and performance of each Fund. Many U.S. futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Derivatives contract prices could move to a limit for several consecutive trading days with little or no trading thereby preventing prompt liquidation of or entry into derivatives positions and potentially subjecting the Fund to substantial losses or periods in which the Fund does not create additional Creation Units. In addition, the CFTC, U.S. futures exchanges and certain non