Exchange Implements Additional Stabilization Measures for WTI Crude Oil-Related ETNs

[Asia Economy Reporter Song Hwajeong] As the discount rate of West Texas Intermediate (WTI) crude oil exchange-traded notes (ETNs) continued to widen due to the sharp drop in international oil prices, the Korea Exchange took additional stabilization measures.

On the 22nd, the exchange announced that if the discount rates of Shinhan Leverage WTI Crude Oil Futures ETN(H) and Mirae Asset Leverage Oil Futures Mixed ETN(H) are not normalized by the end of trading that day, trading will be suspended for two days on the 23rd and 24th. Trading will resume on the 27th using a single-price auction method. The resumption of trading for Samsung Leverage WTI Crude Oil Futures ETN and QV Leverage WTI Crude Oil Futures ETN(H), which are already under trading suspension, will be announced separately.

If the discount rates are not normalized on the day trading resumes despite these measures, the trading suspension will be extended further.

The discount rate between the real-time indicative value and the market price of Shinhan Leverage WTI Crude Oil Futures ETN(H) soared to 605.67% as of 10:08 a.m. that day. The price of this item was 720 won at the same time, down 20.44% from the previous day, but the underlying indicative value plummeted to 102.03 won, about one-sixth of the previous day's closing value (600.95 won), resulting in a significant widening of the discount rate. This discount rate means that the actual value of the item is only one-seventh of the market price, raising concerns about investor losses.

Mirae Asset Leverage Oil Futures Mixed ETN(H) also plunged 29.55% at the same time that day, but its discount rate surged to 149.12%. The discount rates of these items, which track twice the fluctuation rate of international oil prices, jumped into triple digits because international oil prices plummeted for two consecutive days. Earlier, on the 20th (local time), May delivery WTI on the New York Mercantile Exchange (NYMEX) closed at -$37.63 per barrel, marking the first-ever negative price. On the 21st, the June contract, which replaced the expiring May contract that day, closed at $11.57 per barrel, down 43.4% ($8.86) from the previous day.

An exchange official urged, "If the underlying asset (WTI crude oil futures) falls more than 50%, the indicative value will become '0' won, posing a risk of total loss of investment funds, so investors should exercise special caution when investing."

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