Horizons temporarily suspends new subscriptions for units of ETF

By The IJ Staff | February 06 2018 01:30PM

Horizons ETFs Management (Canada) announced Feb. 6 that it will not be accepting any new subscriptions for units of the BetaPro S&P 500 VIX Short-Term Futures™ 2X Daily Bull ETF, which trades on the TSX under the ticker symbol HVU.

Extreme volatility impairs trading

In an announcement, Horizons stated that the decision was made following its assessment of “the extreme volatility in VIX-futures markets that occurred in after-hours market trading yesterday. The unexpected level of volatility has impaired the trading of the underlying derivatives used by many VIX-related exchange traded products that seek to provide exposure to the S&P 500 VIX Short-Term Futures.”

Secondary market

Horizons says units of HVU will continue to trade during market hours and expects that the secondary market will continue to provide holders of units with a forum to sell units at a price reflective of the net asset value per unit. “However, the Manager anticipates that purchases of new units at the available offer price on the secondary market will not be reflective of the underlying net asset value per unit. As a result, the Manager strongly discourages investors from purchasing new units of HVU at this time,” advised Horizons.

Horizons says it is continuing to monitor the trading activities in these underlying derivatives and will advise if any further action on HVU is required.