PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) has been granted new shares by the Securities and Exchange Commission (SEC). Issuance will resume beginning this morning.
Last week, trading in PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) was halted after it ran out of available shares. Trading was resumed after a filing with the SEC for 100 million additional shares was made.
At the close on Thursday, the fund was trading at a 1.8% premium. As normal trading resumes, the premium should slowly start to dissipate, but it may not happen immediately.
Some funds have limits on how many shares can be created at a time. Heavy trading volume can deplete the supply, in which case the provider files an 8-K with the SEC for more shares. While existing shares of an ETF can be traded while approval is awaited, funds run the risk of trading at a premium to their net asset value (NAV) in the meantime. Approval can take days, weeks or months.
A similar situation was seen with United States Natural Gas (NYSEArca: UNG) when the fund ran out of shares. (What happened?)
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.