Deutsche Bank is liquidating the PowerShares DB Crude Oil Double Long Exchange Traded Note (NYSE Arca
XO), in the first sign that increased regulation of the commodity futures market may force commodity exchange-traded products to close. DXO is designed to provide 200% of the monthly return of the near-month crude oil futures contract. At the close of trading on September 1, it had $425.8 million in assets.
In a press release announcing the news, Deutsche Bank said:“Limitations imposed by the exchange on which Deutsche Bank manages the exposure of the Notes have resulted in a “regulatory event” as defined in the terms of the Notes, which has caused Deutsche Bank to redeem the Notes.”
The announcement is surprising because, despite expectations that the Commodities Futures Trading Commission will soon enact new position limits on energy futures, it has yet to actually put those limits in place. The press release suggests that the exchange has taken it upon itself to enforce position limits in place immediately.
So far, no other commodity products have been affected. Deutsche Borse said specifically that none of its other commodity ETFs or ETNs would be impacted.
DXO will be liquidated at net asset value on September 9.