The Financial Industry Regulatory Authority has warned investors that an ETN’s indicative price could differ “sometimes significantly” from the market value.
Unlike ETF providers, ETN issuers can halt creations of new shares, essentially forcing the notes to act like closed-end funds, which can induce large premiums or discounts to the indicative value. [Why a Volatility-Linked ETN is Diverging from the VIX]
For more information on exchange traded notes, visit our ETNs category.
Max Chen contributed to this article.