Forthcoming Commodity ETF Regulation Hits Platinum ETN

October 19, 2009 at 3:00 pm by Tom Lydon      Bookmark and Share

ETF platinumSeveral exchange traded funds (ETFs) and exchange traded notes (ETNs) have been hit by the forthcoming regulations by the Commodity Futures Trading Commission (CFTC). Add a platinum ETN to the growing list.

Barclays Bank PLC has temporarily suspended any further sales from inventory and any more issuance of the ETN iPath Dow Jones AIG Platinum TRSub Index (NYSEArca: PGM), write Kristin Friel and Christine Hudack for Trading Markets.

The suspension of notes may cause deviations in the trading value – more commonly known as tracking error – of the ETN. By limiting the issuance and sales, an imbalance of supply and demand in the secondary market for the notes may occur, and the result would be notes trading at a premium or discount in relation to the baseline value. (How to play precious metals with ETFs and ETNs).

Commodity ETFs have been grappling with potential CFTC regulations for the last several months. (How times are changing for commodity ETFs).

ETNsĀ  are unsecured obligations, not secured debt. The securities have no principal protection; thus, riskier than ordinary unsecured debt securities. (Seven differences between ETFs and ETNs).

For more information on platinum, visit our platinum category.

  • iPath Dow Jones AIG Platinum TRSub Index (NYSEArca: PGM): up 49.7% year-to-date

ETF PGM

Other platinum ETNs are unaffected, including E-TRACS UBS Short Platinum ETN (NYSEArca: PTD) and E-TRACS UBS Long Platinum (NYSEArca: PTM).

Max Chen contributed to this article.

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