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DB announces a halt in new creations on 26 ETNs it is the indexer or issuer on (effective 3/29),...

DB announces a halt in new creations on 26 ETNs it is the indexer or issuer on (effective 3/29), meaning the potential for the notes to trade at significant premiums to NAV as redemptions will still be available. DB expects to resume creations by mid-April. The affected notes follow: BDD, BDG, BOM, BOS, BUNL, BUNT, DEFL, DGP, DGZ, DOD, DTO, DZZ, INFL, ITLT, ITLY, JGBD, JGBL, JGBS, JGBT, LBND, OLO, SBND, SZO, UDNT, UUPT, WMW.
Comments (2)
  • Viper740
    , contributor
    Comments (126) | Send Message
     
    Can someone interpret for me in laymans terms what this means? Thank you kindly in advance.
    18 Mar 2013, 06:22 AM Reply Like
  • SA Editor Jonathan Liss
    , contributor
    Comments (466) | Send Message
     
    It means no new shares will be issued between March 29 and mid-April essentially turning these funds into Closed-End Funds. The way ETFs and ETNs trade so close to NAV is by allowing authorized participants to come in and create or redeem baskets of 50,000 shares at Net Asset Value, allowing them to arbitrage any differences to NAV that may exist. Without the ability to create new shares investors may bid these Notes above their NAV during this period with no ability for authorized participants to come in and bring the shares back down to NAV.
    19 Mar 2013, 02:06 PM Reply Like
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