NEW YORK (Reuters) – A dozen of Deutsche Bank’s exchange-traded notes that provide exposure to oil, metals and other commodities are set to stop trading on Thursday, according to a recent filing by the bank.
Exchange-traded notes, including the DB FI Enhanced Global High Yield ETN, the DB Crude Oil Long ETN and the Elements Dogs of the DOW Dow Jones High Yield Select 10 Total Return ETN, will be delisted at the close of trading on Thursday, according to an April 2 filing with the U.S. Securities and Exchange Commission.
ETNs are issued by a bank and are similar to exchange-traded funds in that they trade on stock exchanges and track benchmark indexes. But they differ from ETFs in that they are debt instruments with a set maturity date and expose investors to the issuer’s credit risk.
The Deutsche Bank ETNs being delisted are relatively small, with assets under management ranging from hundreds of thousands of dollars to a few million dollars, with most set to mature in 2038.
When ETNs stop trading publicly, they leave investors who hold them to find a buyer “over-the-counter,” where investors are not guaranteed anything close to what the notes are worth.
After the delisting, the secondary market for these ETNs may experience a significant drop in liquidity, Deutsche Bank warned in a statement in March.
Banks, under regulatory pressure to cut risk since the financial crisis, have been issuing fewer ETNs and delisting existing ones to focus on their core businesses.
In December 2016, Credit Suisse Group AG shuttered its $1.1 billion VelocityShares 3x Long Crude Oil ETN, making it the largest-ever note to be delisted from U.S. exchanges. (reut.rs/2uWnUCA)
Reporting by Saqib Iqbal Ahmed; Editing by Dan Grebler