The futures-based platinum fund, which has just $100 million in assets, has halted creation of new shares due to anticipated position limits.
PGM's creation halt follows in the footsteps of new "accountability" limits set by the New York Mercantile Exchange. When it comes to platinum, "accountability" limits are tripped at a lower threshold than other commodities. Currently, the limit is set at 1,500 net futures positions, approximately the same size as PGM's assets.
PGM will now enter into the same precarious territory as funds like United States Natural Gas (UNG), iShares S&P GSCI Commodity Indexed Trust (CSG), iPath Natural Gas (GAZ) and PowerShares DB Crude Oil Double Long (DXO), as it halts creation to stay ahead of regulation.Halting creation isn't the only way to stay ahead of the regulatory curve. UNG has begun to restructure its underlying methodology, exchanging to-be regulated futures contracts for other investments, like swaps. PowerShares recently also restructured shares of its Deutsche Bank (DB) indexed DB Agriculture (DBA) and DB Commodity (DBC) funds. During the DBC restructuring process, index provider Deutsche Bank took the unusual step of exchanging New York Mercantile-traded futures contracts for some holdings in Brent Oil Contracts, which trade abroad. The willingness of these managers to restructure their portfolios suggests that when it comes to commodities ETFs - there's a will and a way. The case of DXO did not have as neat of a result. The popular leveraged oil fund decided to redeem shares of the fund for value, euthanizing the fund before it could be killed off by regulation.
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