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Rising Stocks Claim 2 iPath Inverse ETNs

Olly Ludwig

The market rally this year is behind the triggering of automatic redemptions occurring this Friday on two inverse iPath ETNs canvassing broad U.S. equity markets that have fallen in value as stocks have moved higher.

The ETNs’ two prospectuses call for automatic redemptions when the intraday indicative values of the notes fall below $10 a share. The termination event occurred on Friday, Sept. 7, and the redemptions will occur on Sept. 14, said Barclays Plc.

The two notes, the iPath Short Extended S'P 500 TR Index ETN (SFSA) and the iPath Short Extended Russell 1000 TR Index ETN (ROSA), both fell under that critical threshold on Friday, Sept. 7, the bank said in two separate press releases.

The stock market has moved higher in fits and starts this year, buoyed by solid corporate earnings in the U.S. and, more broadly, by increasingly substantive commitments from eurozone policymakers to keep the region’s macroeconomic challenges from spiraling out of control. As an example, the S'P 500 Index has climbed about 15 percent so far in 2012.

The two ETNs have meanwhile been falling sharply. SFSA, the inverse S'P 500 note, has lost almost three-quarters of its value this year, and is now at $9.93 a share, according to data on Google Finance. ROSA, the Russell 1000-linked inverse note, has fallen by two-thirds, and is now at $9.90 a share.

SFSA had $7.84 million in assets as of Sept. 11, while ROSA had $1.41 million, according to data compiled by IndexUniverse.

In the redemptions, note holders of SFSA will receive $9.9312 a share, while ROSA holders will receive $9.8168 a share, Barclays said.

Barclays said in the press release that further information on the redemptions is available on its product website at www.iPathETN.com , and it directed readers to sections that appear under the heading “Specific Terms of the ETNs—Automatic Termination Event.” The releases were dated Sept. 7.


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