ProShares suspends ability of APs to purchase new creation units in 11 ETFs
ProShare Capital Management has temporarily suspended the ability of Authorised Participants (APs) to purchase new creation units in 11 exchange-traded funds (ETFs).
The ETFs in question are ProShares Ultra DJ-UBS Commodity (UCD), ProShares UltraShort DJ-UBS Commodity (CMD), ProShares Ultra DJ-UBS Natural Gas (BOIL), ProShares UltraShort DJ-UBS Natural Gas (KOLD), ProShares Ultra Australian Dollar (GDAY), ProShares UltraShort Australian Dollar (CROC), ProShares Ultra Euro (ULE), ProShares Short Euro (EUFX), ProShares Ultra Yen (YCL), ProShares Short VIX Short-Term Futures ETF (SVXY) and ProShares VIX Mid-Term Futures ETF (VIXM).
The funds will file another Form 8-K to announce the resumption of the offering of creation units, which PCM expects will occur shortly. The ability of authorised participants to redeem creation units is not affected.
During the suspension, the sponsor believes that Authorised Participants and other groups that make a market in shares of the funds will continue to actively trade the shares. However, there may be increases in the spread they quote between offers to buy and sell shares to allow them to adjust to the potential uncertainty as to when they might be able to purchase additional creation units.
In addition, there could be a significant variation between the market price at which shares are traded and the shares’ net asset value, which is also the price at which shares can be redeemed by authorised participants in creation units.
The potential impact of either wider spreads between bid and offer prices, or reduced number of shares on which quotes may be available, could increase trading costs to investors.
The sponsor believes that any potential impact to the market in shares of the funds will not extend beyond the time when additional shares are available for issuance.
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