JPMorgan Chase & Co. (NYSE: JPM) announced today that the maximum number of Alerian MLP Index ETNs (NYSE Arca: AMJ) authorized for issuance will be 129 million ETNs. This size limitation does not affect the weekly repurchase rights at the option of note holders described in the reopening pricing supplement and the product supplement relating to the ETNs. Other exchange traded notes, structured notes and debt securities issued by JPMorgan Chase & Co. are not affected by this maximum issuance authorization.
As a result of this determination, the current market capitalization of the maximum number of ETNs authorized for issuance, calculated by multiplying the $36.39 closing price of the ETNs on June 13, 2012 by the maximum number of ETNs authorized for issuance, would be equal to $4,694,310,000. As of June 13, 2012, JPMorgan Chase & Co. has issued 117,950,000 ETNs with an aggregate market capitalization of $4,292,200,500, based on the $36.39 closing price of the ETNs on June 13, 2012. The current market capitalization of the ETNs held by investors equals the number of ETNs issued as of June 13, 2012 multiplied by the closing price of the ETNs on June 13, 2012, excluding approximately 2.5 million ETNs held by an affiliate of JPMorgan Chase & Co. for secondary market purposes. Accordingly, the difference in current market capitalization of ETNs authorized for issuance and the current market capitalization of the ETNs held by investors is approximately $500 million.
As disclosed in amendment no. 6 to reopening pricing supplement no. 1 relating to the ETNs under the heading “Selected Risk Considerations — Many Economic and Market Factors Will Impact the Value of the Notes,” the market value of the ETNs may be influenced by, among other things, supply and demand for the notes, including inventory positions with any market maker.
It is possible that the maximum issuance authorization, as described above, may influence the market value of the ETNs. Due to market supply and demand, the price of the ETNs may trade at a premium above their indicative note value. Any ETN price premium may subsequently decrease resulting in financial loss to sellers who paid this price premium. ETN investors should always consult their financial advisors before purchasing or selling ETNs, especially ETNs with premium characteristics.