First ETP Closure Of 2011 Has Arrived!

After seeing 49 closures in 2010, the exchange traded products business made it through the first four months of 2011 unscathed in terms of products closures, but just a few days into May and we finally have news of termination for one ETN. The Barclays Short Double Leveraged Inverse S&P 500 TR ETN

will cease trading on Wednesday May 4 and be redeemed at $10 per share, the price where the ETF currently trades. Created in 2009, BXDD is unlike traditional inverse exchange traded products in that it did not reset on a daily basis, meaning BXDD could conceivably go to zero if the S&P 500 moves strongly to the upside. In other words, the daily reset function of many inverse ETFs that is so often criticized is what keeps those ETFs from going to zero when the index they track is moving sharply higher. BXDD didn't have that reset mechanism in place. Barclays stopped creating BXDD shares in February and the ETF has had weak average daily of less than 28,000 shares. Investors that do not sell their BXDD shares on the open market prior to the redemption date will receive a cash payment of $10 per share owned, according to the fund's prospectus.