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Regulator warns to avoid ‘unpleasant’ ETN surprises

Posted on 13 July 2012

A US regulator has sounded an alert to investors warning them to ‘avoid unpleasant surprises’ in exchange traded notes (ETNs). The Financial Industry Regulatory Authority (Finra) has issued the note to make investors aware that ETNs do not buy or hold assets to replicate the performance of the underlying index.
ETNs are a form of unsecured debt that trades on exchange with the promise of a return linked to a market index or other benchmark. As such, they are not funds with ring-fenced assets, leaving the investor exposure to the counterparty risk of the bank issuing the note………………………………………..Full Article: Source


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