An ETN behaving not quite so badly:
The iPath MSCI India ETN (INP) has dropped more than 16 percent over the past two days, dramatically paring—but far from eliminating—the premium over its daily indicative value. INP closed at $89.50 Monday night, down $17.60 since Thursday, after giving up more than 13 percent in heavy—more than three times its average daily volume—trading Monday.
Its premium at Monday’s close was just 5.35 percent, hideous enough in its own right, but down from well over 20 percent a week ago.
The premium had built up steadily since Indian regulators moved to cool the country’s booming stock market in late October, forcing Barclays Capital to suspend the issuance of new shares. The company has recently updated the ETN’s prospectus, most recently to reflect an Internal Revenue Service ruling that eliminated the tax advantages of its currency ETNs, but—despite an active in-house flackery—otherwise remained schtum over the INP-specific issues.
It would be interesting to know just which of Barclays’ friends and family—including its prime brokerage customers and funds managed by its Barclays Global Investors affiliate—were miraculously able to borrow stock for shorting and capitalize on the market distortion. But don’t hold your breath for a press release on that either.
Earlier on NakedShorts:
An ETN behaving badly: INP
Dec. 11 2007
Positions: Long India Fund (IFN)