The Swiss bank’s decision earlier this week to dramatically cut back its exchange-traded notes (ETN) business, following the delisting of nine ETNs with close to US$3 billion in assets under management and the suspension of further issuances, shows the hit taken by this part of the US$4.4 trillion US exchange-traded products industry.

As part of its continuing effort to monitor and manage its suite of exchange traded notes, Credit Suisse has decided to delist the foregoing ETNs to better align its product suite with its broader strategic growth plans, stated the bank in an announcement.

The recent pandemic-fuelled market turmoil has put ETNs under a bad light because of their vulnerability to extreme market swings and losses. Those with geared (leverage/inverse) exposure were laid bare earlier this year, when a number of providers including UBS and Citigroup delisted and liquidated tracker products.

The then US$1.5 billion VelocityShares Daily 2x VIX Short-Term ETN (NASDAQ:TVIX) which held half of the assets of the ETNs being delisted and is one the most popular instruments in the US to trade volatility, went down more than 12% after the announcement and closed at US$132.10 – eight percent down.

The other ETNs being delisted include the 3x Long Gold ETNs linked to the S&P GSCI Gold Index; 3x Long Silver ETNs linked to the S&P GSCI Silver Index; 3x Inverse Gold ETNs linked to the S&P GSCI® Gold Index; 3x Inverse Silver ETNs linked to the S&P GSCI Silver Index, 2031; 3x Long Natural Gas ETNs linked to the S&P GSCI Natural Gas Index; 3x Inverse Natural Gas ETNs linked to the S&P GSCI Natural Gas Index; Daily Inverse VIX Medium Term ETNs linked to the S&P 500 VIX Mid-Term Futures Index; and VIX Short Term ETNs linked to the S&P 500 VIX Short-Term Futures Index.

Swiss digital bank debuts dual currency certificate on Bitcoin/USD

Switzerland’s SEBA Bank has launched a certificate targeted at investors looking to take advantage of bitcoin’s high volatility.

The Dual Currency Certificate on BTC/USD offers easy entry into the cryptocurrency market and an attractive return. This USD cash-settled structure offers a maximum yield of [44.7]% pa, in USD, as long as the underlying final price is at or above the strike price. If the final price is below the strike price (ie BTC depreciates versus USD beyond the strike price), investors will be exposed one to one to a negative performance of the underlying and a potential loss of the initial investment.

‘The launch of the Dual Currency Certificate on BTC/USD shows how traditional banking and crypto finance are converging,’ said SEBA Bank CEO Guido Bühler (right). ‘Investors benefit both from the stability of a fully-regulated Swiss bank and from the yield opportunities offered by the crypto markets.’

The price of bitcoin in the underlying (USD per one Bitcoin) is measured by a reference rate administered by MV Index Solutions and calculated by CC Data Limited (“MVIS CryptoCompare Bitcoin Benchmark Rate”).

UBS adds to Etracs ETN range

UBS Investment Bank has announced the listing of a new ETN - the Etracs Midstream Energy Index ETN on NYSE Arca, which is part of its Alerian indices-linked ranged.

The Alerian Midstream Energy Index is a broad-based composite of North American energy infrastructure companies who earn the majority of their cash flow from midstream activities involving energy commodities, such as gathering & processing, liquefaction, pipeline transportation, rail terminaling, and storage of energy commodities. The Index is calculated by S&P Dow Jones Indices using a capped, float-adjusted, capitalisation weighted methodology. 

There five other Alerian indices registered on SRP’s database including the Alerian MLP ETF, Alerian MLP Index, Alerian MLP Infrastructure PR Index, Alerian MLP Infrastructure TR Index, and Alerian Natural Gas MLP Index which appear across 50 structures worth over US$6 billion.

GS announces Solactive partnership, Charles Schwab takes over Motif’s remains 

Goldman Sachs has announced that effective after the market close on 23 June, Motif ceased to publish the Motif Capital Aging of America 7 ER Index, Motif Capital National Defense 7 ER Index, Motif Capital National Defense Price Return Index and the Motif Capital Artificial Intelligence 8 ER Index.

As reported by SRP, the US bank has selected Solactive as the new index provider and calculating agent for each successor index.

In the meantime, Charles Schwab has agreed to buy some of the remains of Motif, the portfolio management company behind Motif’s indices which ceased operations and transferred them to Folio Investing in April.

The discount brokerage, which is also the custodian to more than 7,500 RIAs, announced it has reached an agreement to buy all of Motif’s technology, intellectual property, algorithms, patents and source code. It is an undisclosed all-cash deal expected to close before mid-2020. No other details of the transaction were disclosed.

Hardeep Walia (above), the founder and CEO of Motif, will join Schwab and the company also plans to hire the majority of Motif’s development and investment employees.

Motif’s broker-dealer, RIA, client accounts, and client assets are not included in the deal with Schwab.

BLX Global targets airline industry revenue

BLX Global, a US provider of indices and derivative-based investment products, has launched a new index targeted to investors seeking to ‘navigate unprecedented uncertainty in the airline industry’.

The BLX Domestic Airlines Revenue Index is designed to provide a broad measure of airline industry performance. Priced daily, the index reflects changes in the trailing 12-month revenue for a select group of major airlines listed on US stock exchanges.

Unlike traditional stock indexes or other hedging tools, the index provides direct exposure to business fundamentals, according to BLX Global founder Jacob Mohs.

“The Covid-19 pandemic highlights the need for better risk management tools.” said Mohs, adding that the BLX Domestic Airlines Revenue Index can be licensed as a benchmark to trade cash settled options, futures, and swaps or as a reference asset for structured notes. ‘Investors and companies in the travel industry can use derivatives based on the index to hedge the risk of a continued drop off in airline passengers, or express macroeconomic views.’

Historical data and updated pricing is available on the Thomson Reuters Eikon platform.

JP Morgan bolsters Germany’s DDV ranks

The German derivatives association (Deutscher Derivate Verband, or DDV) has expanded its membership with the addition of JP Morgan, to its ranks.

The DDV now has 16 full members and 17 sponsoring members. Dr Henning Bergmann (right), CEO and member of the board of directors of the DDV, noted the membership as a ‘milestone for the entire structured products industry in Germany’ as the US bank’s ‘fundamental philosophy is to establish itself in new business areas on a long-term basis’.

‘As such, joining the DDV is a logical step for the bank, and it also increases the Association’s clout in its policy-related activities and in the development of industry standards at the German, European, and international levels,’ he said.

Gunnar Regier, head of markets at JP Morgan, the bank’s goal in the German market is ‘to occupy a market segment on a long-term and sustainable basis’.

The US bank began expanding its range of products and services for investors in the German in 2017. SRP data shows that JP Morgan has entered the country’s top 10 issuer ranking in terms of issuance on the back of almost 35,000 products marketed worth an estimated €82.6m.

Image: Andrew Buchanan/ Unsplash.