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Days after FED. announces $300B more buying after QE2, we have massive redemptions in VIX ETF's

Fed May Buy $300 Billion in Treasuries After QE2
By Daniel Kruger and John Detrixhe -
Jun 27, 2011 7:15 AM ET

After the news above occurred, these actions followed quickly below:


VZZ, which had $12.8 million in assets as of June 30, was halted by Arca, the New York Stock Exchange’s electronic trading platform, after the ETN fell to $9.98 a share. That was $1.82, or 15 percent lower on the day.

The actual redemption date is the “fifth business day following the automatic termination date,” according to the press release. The company said further details about the automatic redemption, including the redemption value, will be made public on iPath’s website as soon as possible after the close of business on July 1.

The notes were brought to market in November 2009. Their price had fallen by more than 50 percent in the past six months and by more than 60 percent in the past year.

The midterm volatility ETN, VXZ, as noted, was also trading more than 4 percent lower on Friday afternoon, at $48.04 a share. It has declined more than 20 percent in the past six months and more than 40 percent in the past two years. It too was launched in January 2009.

But it’s also had success gathering assets, though it had an usually large redemption on Wednesday, of more than $257 million, or about a third of its assets. It wasn’t immediately clear what prompted such a large and unusual shift in assets. It had $526.2 million in assets as of June 30.