Barclays has chosen to terminate its entire family of iPath-branded exchange-traded Notes (ETNs) which have been trading on the Toronto Securities Exchange (TSX). The full line-up of 12 Canadian ETNs will be liquidated within the next week. In all, the Barclays ETN range in Canada include four tied to the S&P500 VIX (volatility) index, four currency products, two interest rate products, one linked to the CBOE BuyWrite Index and the last linked to crude oil.

The cause of death is lack of interest, according to Barclays.

“Investors have shown a preference for trading US dollar-denominated ETNs on a US exchange,” said Barclays’ head of ETNs, Americas, Ian Merrill. “As a result, we have voluntarily taken the decision to de-list all … of our iPath ETNs from the Toronto exchange later this month.”

Imminent demise
Three of the ETNs will see their final trading day on May 23. These include the iShares S&P 500 VIX Short-Term Futures CAD Hedged ETN, the iPath S&P 500 Dynamic VIX CAD Hedged ETN, and the iPath Pure Beta Crude Oil CAD Hedged ETN. The individual redemption prices for these three ETNs were recorded as of May 15.

A second group of nine Barclays iPath ETNs will be liquidated on May 26. However, this group has been dually listed on both the TSX as well as the NYSE, and all nine will continue to trade on the US exchange, Barclays confirmed. This group includes: the iPath CBOE S&P 500 BuyWrite Index ETN, the iPath EUR/USD Exchange Rate ETN, the iPath GBP/USD Exchange Rate, the iPath JPY/USD Exchange Rate ETN, the iPath Optimized Currency Carry ETN, the iPath S&P 500 VIX Mid-Term Futures ETN, the iPath S&P 500 VIX Short-Term Futures ETN, the iPath US Treasury Flattener ETN and the iPath US Treasury Steepener ETN.

Structuring ETNs
None of these Barclays iPath ETNs had reached their maturity dates. Early iPath ETNs from Barclays had been purposefully structured to mature in three decades, although they could be traded daily, and throughout the trading day, on a stock exchange.

Moreover, none are of the auto-knock out type that Barclays carefully crafted so as to automatically liquidate once a specific downside trigger price was reached. Barclays launched the first point-to-point leveraged ETNs in 2009, with 20 more such ETNs to follow. Each was created such that it would be automatically redeemed once it reached a specified trigger price.

The automatic redemption event was structured into the exchange-traded investment product such that the ETN could never fall into a zero or negative valuation and bring very heavy losses to investors.

Barclays has already redeemed 10 of 21 such leveraged proprietary ETNs, including US and EAFE-focused ETNs employing a short strategy. These had suffered as equity markets more recently reached historic highs.