Trading Halted on Three Crude Oil Futures ETNs

Even with Single-Price Trading Applied, Disparity Rate Remains Unstable
If Disparity Rate Does Not Fall Below 30% After Trading Suspension on the 16th, Indefinite Extension Will Be Implemented

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Three exchange-traded notes (ETNs) related to West Texas Intermediate (WTI) crude oil futures, whose price deviations from the actual crude oil price have become excessively large, will be suspended from trading. This is because the market overheating did not subside despite the implementation of single-price trading measures.

On the 14th, the Korea Exchange announced that it will suspend trading of three ETNs?'Samsung Leverage WTI Crude Oil Futures ETN,' 'Shinhan Leverage WTI Crude Oil Futures ETN(H),' and 'QV Leverage WTI Crude Oil Futures ETN(H)'?starting on the 16th. This is because their premium rates have not fallen below 30% for five consecutive trading days since the 8th. As of the closing price on that day, the premium rates were 42.6% (Samsung), 36.6% (Shinhan), and 34.7% (QV), respectively.

Earlier, on the 10th, the exchange announced that for four ETNs with excessive premium rates, it would apply a single-price trading method, where bids are collected every 30 minutes and trades are executed at a single consolidated price. However, since the premium rates did not fall below 30%, the exchange took the 'strong measure' of suspending trading. If the premium rates do not drop below 30% on the day trading resumes, the suspension period may be extended indefinitely.

If an investor buys a security with a large premium rate at the current market price, they may incur investment losses equivalent to the premium rate during the process of the market price adjusting to the indicative value. For example, if the international oil price is $24, and the indicative value of the crude oil futures ETN is 1,700 KRW while the market price is 3,000 KRW, the premium rate is 76%. If the oil price rises by 30%, the indicative value of the leveraged product increases by 60%, reaching 2,720 KRW. Since this is still below the current market price of 3,000 KRW, investing now would mean bearing a potential loss.

Meanwhile, the 'Mirae Asset Leverage Crude Oil Futures Mixed ETN(H)' recorded a closing price of 3,900 KRW and an indicative value of 3,111 KRW on the same day, lowering its premium rate to 25.4%. Accordingly, the exchange decided to lift the single-price trading measure for this product and apply the existing continuous trading method starting from the 16th.

This content was produced with the assistance of AI translation services.