Regulators giving increased scrutiny to ETNs in wake of volatility
Jun 25, 2012 / Author Vernon Litigation Group
ETNs , Tags: Chris Vernon, ETN, exchange traded note, financial industry regulatory authority, FINRA, SEC, securities and exchange commission, Susan Healy, Vernon Litigation
JPMorgan has announced that it has stopped issuing shares in its Alerian MLP exchange-traded note. Regulators at the Securities and Exchange Commission and the Financial Industry Regulatory Authority have already announced that they are giving increased scrutiny to the ways in which ETNs are sold to consumers, according to a report in Investment News. The regulatory interest came following the closure of another ETN. In that situation, Credit Suisse VelocityShares Daily 2X VIX Short-Term ETN (TVIX) stopped issuing new shares, the price doubled and subsequently dropped dramatically when the ETN began issuing shares again. Closing of the Alerian MLP exchange-traded note by JPMorgan is likely to increase the volatility of the ETN.