Barclays Suspends ‘OIL,’ ‘VXX’ Creations
Barclays has halted new share creations of the iPath Pure Beta Crude Oil ETN (OIL) and the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) Monday morning, becoming the latest exchange-traded products to close its doors to new cash in recent weeks.
In a statement, the bank said it ran out of issuance capacity for the two products and would halt new creations indefinitely. It claimed the halts were not a result of the war in Ukraine.
However, both funds are cleared to issue far more notes than what’s currently in the market. Barclays can issue up to $350 million worth of notes in OIL and just under $8.16 billion in VXX notes, according to its latest pricing filings to the SEC. Those notes carried $189.5 million and $859.6 million, respectively, as of Friday, according to FactSet data.
A representative for Barclays declined to comment further.
Oil prices and volatility have soared in the weeks since Russia began its invasion, driving OIL specifically to some of the highest intraday volumes in the last 12 months.
VXX’s flows have been more active in the past several months, as inflation, COVID surges and now the war in Ukraine have kept the VIX largely near or above the key 20-point mark that implies significant fear in the options market.
Russia’s ongoing closure of the Moscow exchanges and the country’s isolation from Western markets have led all five of the Russia-focused ETFs to suspend creations and ultimately halt trading in recent days.
The Teucrium Wheat Fund (WEAT) also briefly halted creations last week, as Russia and Ukraine are responsible for a third of the world’s wheat exports, leading to a supply-side price squeeze. The rush for exposure sent WEAT to the limit of its allotted shares that it could issue before needing to update its prospectus with the SEC.
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