Ripple Prime Challenges Wall Street Giants With Leveraged ETF Swap Financing Business

TLDR

• Ripple Prime has begun offering swap financing services to leveraged ETFs, traditionally a banking sector stronghold.
• The Tradr 2X Long SNDK Daily ETF compensates Ripple with the overnight bank funding rate plus an additional 4%.
• XRP was changing hands around $1.40, reflecting a decline of more than 5% over the preceding 24-hour period.
• The brokerage operation stems from Ripple’s $1.25 billion purchase of Hidden Road, finalized in October 2025.
• Following a $275 million capital raise in August, Ripple Prime broadened its partnership with Brevan Howard on Oct. 6.

Ripple has stepped into the leveraged exchange-traded fund financing arena through Ripple Prime, its prime brokerage division. The Wall Street Journal broke the story on Oct. 7.

Major banking institutions and securities houses have historically dominated this swap financing segment. Firms offering these services collect reliable fee income.

The XRP token displayed minimal response to this development. At press time, it was hovering around $1.40, registering a drop exceeding 5% over the previous day.

Technical readings tilted toward the negative side. Market data showed seven sell indicators versus five buy signals.

How Ripple Prime’s ETF Financing Works

Leveraged ETFs are designed to produce two or three times the daily performance of an underlying stock or benchmark. Fund managers frequently employ total return swaps rather than purchasing the underlying securities outright.

A brokerage provides the fund with this swap arrangement in exchange for compensation. The broker subsequently offsets its risk position through stock purchases or other derivative instruments.

Among Ripple’s current customers is the Tradr 2X Long SNDK Daily ETF, designed to mirror double the daily movement of Sandisk stock. A regulatory document reveals that the fund compensates Ripple at the overnight bank funding rate with a 4 percentage point markup.

As of Tuesday’s calculations, this arrangement translated to approximately 8% of the fund’s total assets annually. This expense is borne by the ETF’s shareholders and exists independently of the standard management fee.

Morningstar Direct data indicates that 593 leveraged ETFs operate in the United States, overseeing assets exceeding $256 billion. Single-stock funds account for 426 of these vehicles.

“It’s definitely a growing and meaningful part of our business,” said Noel Kimmel, president of Ripple Prime.

Non-banking entities including Jane Street and Clear Street also maintain active positions in this sector. Banking institutions face more stringent regulatory requirements regarding risk exposure, while numerous emerging ETF providers haven’t established traditional banking relationships.

Hidden Road Deal and New Funding

Ripple’s entry into prime brokerage came through its $1.25 billion takeover of Hidden Road. The transaction was publicly announced in April 2025 and reached completion in October 2025, at which point the entity was rebranded as Ripple Prime.

In August 2026, Ripple Prime introduced a Delta One operation featuring total return swaps on U.S. equities, benchmarks and cryptocurrency assets. The leveraged ETF financing initiative utilizes identical swap structures.

The brokerage secured $275 million in August via senior unsecured notes that received a BBB rating from KBRA. This capital raise came after a $200 million financing arrangement with Neuberger Berman established in May.

Ripple Prime currently services a client base exceeding 300 institutional participants. The firm has disclosed maintaining regulatory net capital surpassing $1 billion.

The publicly disclosed ETF financing arrangements show no connection to XRP or Ripple’s RLUSD stablecoin product.

On Oct. 6, Ripple Prime enhanced its existing arrangement with Brevan Howard, which oversees approximately $35 billion in assets. Ripple will supply the hedge fund with prime brokerage services, clearing operations and financing solutions spanning both conventional and digital asset markets.