Deutsche Bank, the sponsor behind PowerShares DB exchange-traded
products, is suspending creations, effective immediately, on seven
futures-based commodity ETNs in that product family that together
have more than $40 million in assetsâin part to stay ahead of
potential problems related to changing position-limit
The move, which wonât stop trading or redemptions, means the
ETNs may start trading like closed-end funds. In other words, they
may trade at premiums or discounts to net asset value since they
will now have a finite number of shares.
In a press release issued by Deutscheâs New York-based U.S.
headquarters, the company said the affected ETNs include:
- PowerShares DB Commodity Double Short ETN (NYSE Arca:DEE),
which has $2.5 million in assets
- PowerShares DB Commodity Double Long ETN (NYSEArca:DYY, which
has $11.8 million
- PowerShares DB Commodity Short ETN (NYSEArca:DDP), which has
assets of 5.7 million
- PowerShares DB Commodity Long ETN (NYSEArca:DPU), $6
- PowerShares DB Agriculture Double Short ETN (NYSEArca:AGA),
- PowerShares DB Agriculture Short ETN (NYSEArca:ADZ), $1.9
- PowerShares DB Agriculture Long ETN (NYSEArca:AGF), $11.1
The halting of creations echoes what the company did a year ago
with its PowerShares DB Agriculture Double Long ETN (NYSEArca:DAG).
At the time of the suspension, DAG had almost $150 million in
assets. It now has less than $50 million. Concerns about changes in
rules at the Commodity Futures Trading Commission on
futures-contract position limits were at the center of the DAG
decision as well, though the relatively small size of the seven
ETNs involved in the latest move made the position-limit concern
less immediate. In any case, the CFTC has yet to promulgate new
rules, though changes are widely expected.
It seems likely that the relatively small assets under
management made Deutsche Bankâs decision to halt creations in the
additional seven ETNs easier. An official at Deutsche Bank declined
to comment beyond the press release.
Unaffected by the decision to halt creations in the seven ETNs
were the two huge commodity-related funds, the $6.15 billion
PowerShares DB Commodity Index Tracking Fund (NYSEArca:DBC) and the
$2.07 billion PowerShares DB Agriculture Fund (NYSEArca:DBA).
Wheat-Related Index Change
Separately, Deutsche Bank said most of the commodity ETNs
affected by the creations haltâas well as DAGâwould also be
affected by a change in indexes related to diversifying their
exposures to wheat. The change will be effective after the close of
trading on Feb. 16.
While the percentage of each portfolioâs allocation to wheat
wonât change, Deutsche has decided to diversify away from the
Chicago Board of Trade, where all the wheat exposure of each fund
had been concentrated.
Instead, each fundâs wheat allocation will be split into three
equal parts, with a third remaining on the CBOT, another third
migrating to the Kansas City Board of Trade and the final third
switching to the Minneapolis Grain Exchange.
The affected ETNs include:
- PowerShares DB Agriculture Double Short ETN
- DAG, the ETN whose creations were suspended about a year
- ADZ, whose creations were suspended today
- AGF, whose creations were suspended today
- DYY, whose creations were suspended today
- DPU, whose creations were suspended today
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