Barclays suspends sales of notes linked to oil, volatility

By Iain Withers and Saqib Iqbal Ahmed

LONDON/NEW YORK (Reuters) – British bank Barclays said on Monday it had suspended the sales and issuance of two exchange-traded notes (ETNs) – one linked to crude oil and another to a gauge of market volatility.

The two notes had a combined market capitalisation of over $1 billion as of March 11, Barclays data showed.

“This suspension is being imposed because Barclays does not currently have sufficient issuance capacity to support further sales from inventory and any further issuances of the ETNs,” Barclays said in a statement.

“These actions are not the result of the crisis in Ukraine or any issue with the market dynamics in the underlying index components. Barclays expects to reopen sales and issuances of the ETNs as soon as it can accommodate additional capacity for future issuances,” the bank added.

The ETNs affected are called iPath Pure Beta Crude Oil and iPath Series B S&P 500 VIX Short-Term Futures.

Barclays declined to elaborate on the reasons for the actions, which were effective from the opening of trading on Monday.

ETNs are debt securities that banks issue with the promise to pay holders a return linked to the performance of underlying securities or benchmarks.

They are similar to exchange-traded funds in that they trade on a stock exchange and offer investors exposure to markets that are otherwise difficult to access, but they differ in that the buyers do not hold underlying assets such as stocks or commodities.

Matt Thompson, managing partner at Chicago-based investment adviser Thompson Capital Management, which specialises in investments using VIX, said Barclays’ move could have been prompted by a lack of liquidity in the market.

“This has happened on a few occasions since VIX ETPs (exchange traded products) started in 2009,” Thompson said.

The esoteric world has grabbed headlines in the past – with Credit Suisse’s move to delist several ETNs including one linked to Wall Street’s “fear gauge”, as the VIX is known, in 2020 leading to heavy losses for investors and a subsequent lawsuit.

(Reporting by Iain Withers in London and Saqib Iqbal Ahmed in New York; editing by Barbara Lewis)