Bubble Bursting
The prices of leveraged oil ETNs plunged after trading resumption on April 27. Recently, the disparate ratios of those investment products soared to up to 1,000 percent due to speculation.
That day, Samsung Leverage WTI Crude Oil Futures ETN and QV Leverage WTI ETN plunged 60 percent immediately after the opening of the market. Shinhan Leverage WTI ETN plummeted by more than 50 percent and Mirae Asset Leverage Crude Oil Futures ETN dropped by approximately 15 percent.
Non-leveraged ETNs have a daily price fluctuation range of 30 percent whereas the range of those leveraged products is 60 percent.
Trading of the four leveraged ETNs was temporarily suspended until April 26. Korea Exchange recently took a measure so that trading is automatically suspended once the disparate ratio reaches a certain level. As for oil ETNs, single-price trading is conducted until the ratio becomes 12 percent or less once it becomes 20 percent or more. Trading is suspended for three days once the ratio becomes 30 percent or more during single-price trading.