本文发表在 rolia.net 枫下论坛Deutsche Bank AG is closing a popular exchange-traded oil product amid a clampdown by regulators on holdings of leveraged funds.

The bank said Tuesday it plans to redeem all shares of the $425 million PowerShares DB Crude Oil Double Long exchange-traded notes on Sept. 9.

The closure marks the first casualty of the increased regulatory scrutiny of exchange-traded investment funds that use leverage to invest in commodities markets.

In a statement, Deutsche Bank cited "limitations imposed" by the New York Mercantile Exchange for its decision.

At the orders of commodities regulators, the Nymex recently imposed restrictions on oil holdings for certain funds, limits the Deutsche Bank product has exceeded.

Regulators are seeking to curtail the expansion of exchange-traded products, which are popular vehicles for small investors seeking access to futures contracts of oil, metals and grains. Holdings of exchange-traded-fund products have ballooned to $59.3 billion as of July, an inflow of $22.1 billion since the beginning of this year, according to the National Stock Exchange. Deutsche Bank has a raft of products in the form of exchange-traded notes that are linked to the price of oil. The double-long ETN promised to generate two times the return of oil prices and attracted aggressive investors betting oil prices would rise.

The ETN was launched in June 2008 and has since grown into one of the largest leveraged commodity products in the U.S.

The ETN is entirely invested in the futures contract for delivery in July 2010 on the Nymex. As it grew, the product hit position limits set up by the exchange, according to people familiar with the firm's operation.

Nymex declined to comment on the business of individual firms.

Once the limits were hit, managers were restricted from buying more oil contracts, making it harder to track the promised return going forward. Despite the troubles with the ETN, Deutsche Bank said it will continue to roll out commodity-linked products for retail investors within the new regulatory guidelines.

Deutsche Bank stopped issuing new shares in the ETN two weeks ago. Since the suspension, the ETN has been trading at a premium to its net asset value. That premium is currently about 3%.

Deutsche Bank said in the announcement that it will determine the "repurchase value" on Sept. 9.

The closure could place a temporary dampener on oil prices as the managers sell off the oil contracts.

"This is an example of how actions by regulators can lead to a reduction of investment choices by retail investors, without necessarily producing a benefit to the marketplace at all," said John Hyland, chief investment officer of U.S. Commodity Funds LLC, which runs the largest oil and natural-gas ETFs in the U.S.

The Commodity Futures Trading Commission is on track to set position limits, including those held by exchange-traded products.

In August, the commission revoked exemptions to two big ETFs run by Deutsche Bank and a New York-based investment fund, which had been allowed to go beyond the existing limits on agricultural products.更多精彩文章及讨论，请光临枫下论坛 rolia.net

you can see that DXO down 7.53% after hour whereas the USO and OIL both are up a bit;
indicates looks like DXO no more follow the Crude Oil future anymore, this will post huge risk to people who believes that it still follow the curde price

DXO is OIL 2X ETF fund;
and USO, OIL all are 1X OIL long fund;

本文发表在 rolia.net 枫下论坛The Death of an Energy ETF (DXO)
Posted: September 1, 2009 at 5:15 pm

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It has been no secret that the CFTC is looking into many exchange traded notes and exchange traded funds that deal in the energy markets, along with other futures and other investment vehicles, to see how the role of speculators has played in the price swings in the commodity markets. Today came the announcement that one ETN is going to be killed (ergo redeemed) as a result.

Deutsche Bank announced that it will redeem all outstanding units of its PowerShares DB Crude Oil Double Long Exchange Traded Notes (NYSE: DXO). The financial firm said that limitations imposed by the exchange on which Deutsche Bank manages the exposure of the notes have resulted in a “regulatory event” as defined in the terms of the notes… and this is causing Deutsche Bank to redeem the notes.

Deutsche Bank has said that this is an isolated event and does not affect the other notes offered by the firm. It further stated that there is no affect upon the PowerShares DB exchange traded funds offered by DB Commodity Services LLC and it pledged in the release to continue to maintain and develop new commodity exchange traded products and to offer a full range of commodity trading services.

The firm expects to provide notice of this redemption on September 9, 2009. The repurchase value of the Notes will be determined as of the date notice is given. Payment of the repurchase value of the Notes will be made on the third business day following the date of notice. Furthermore, the daily creations of DXO will remain suspended. Daily repurchases at the option of investors will be accepted in the normal manner up to and including September 9.

In short, this ETN may not trade normally now. Further, when other ETN or ETF products have been closed at other firms unrelated to this, it is a possibility that investors need to at least consider that the funds (or notes here in this case) may not act or react to the underlying index or act according to its investment policy. That is unfortunate, but when this occurs the best thing traders can do is to try to limit the exposure. We recently warned that certain ETF and ETN products were starting to look more and more like closed-end funds rather than mirror ETF/ETN products that trade exactly around an underlying index or commodity. This was one of them.

The PowerShares DB Crude Oil Double Long ETN (NYSE: DXO) closed down 2.2% at $4.38 today, and the 52-week trading range is $1.73 to $17.35. We also saw more than 7 million shares trade today versus an average volume of roughly 12 million.

Be advised. This is not a crystal ball call, but it is intuition. 2009 is the year that the energy ETF, energy ETN, and probably the margin requirements and cost of futures on exchanges are under the gun. If this works, there will be more of the same. What else can be manipulated or could be swung around wildly by speculators that is another hard commodity with a finite size of the underlying physical markets? Metals… That will be the focus of 2010, if not 2009.

The CFTC is targeting energy in this current effort. But certain commodities do have limits on the number of derivatives or related products that are allowed based upon the size of the underlying markets themselves. Stocks have limits on the size of a number of stock options that can trade on any underlying stock for the obvious reason that suddenly you could see gross moves in the underlying stock based upon nothing more than options trades. That can already happen now, but the size limits are to limit the impact.更多精彩文章及讨论，请光临枫下论坛 rolia.net