VelocityShares 3x Inverse Crude Oil ETN (DWT)

[Smittle]

Plans for New 3X Oil ETF in the Works

Plans for the new geared ETF come as a pair of popular oil ETNs will be deslisted

By Chris Dieterich • Nov 30, 2016 1:35 pm ET

Out with the old, in with the new.

Fund provider US Commodity Funds this week filed a preliminary prospectus for a triple-leveraged exchange-traded fund linked to light, sweet crude futures, less than two weeks after Credit Suisse announced it will delist two 3x oil-tracking exchange-traded notes that are heavily trafficked by traders.

Credit Suisse will delist, but not outright close, both ETNs from the New York Stock Exchange Arca market on Dec. 9, according the bank’s statement. The move is unusual and could be a concern for investors left holding the ETNs after that date. Credit Suisse said that if the ETNs trade at all after the delisting, it will be on an an over-the-counter basis. An ETN is an unsecured loan to a bank that provides exposure to a specific asset. Credit Suisse said that it could wind down the notes, though it has not expressed plans to do so.

The VelocityShares 3x Inverse Crude Oil ETN, ticker DWTI, and VelocityShares 3X Long Crude Oil ETN, ticker UWTI, have roughly $1.5 billion in assets between them. The timing of today’s filing suggests that US Commodity Funds senses opportunity to fill void being left by Credit Suisse.

US Commodity Funds is the firm behind the widely traded $3.4 billion United States Oil Fund, ticker USO.

The leveraged ETNs have been popular among millenials and are heavily traded by short-term speculators. The average holding period of the for the UWTI is less than six days, according to Sebastian Mercado, a strategist at Deutsche Bank.

The UWTI on Wednesday shot up 25% after delegates from members of the Organization of the Petroleum Exporting Countries reached a deal in Vienna to cut production.

http://blogs.wsj.com/moneybeat/2016/11/30/plans-for-new-3x-oil-etf-in-the-works/