DB Bullish US Dollar ETF Was Halted As It Ran Out Of Shares

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November 6, 2009 3:53pm ETF BASIC NEWS NYSE:UDN

halt“The PowerShares DB US Dollar Index Bullish Fund ran out of shares and trading of the security was halted for about 45 minutes amid increased bets that the currency


 will rebound. The exchange-traded fund that’s managed by Deutsche Bank AG and distributed by Invesco PowerShares Capital Management LLC had 6.6 million authorized units as of the close of trading Nov. 3, according to a filing with the U.S. Securities and Exchange Commission today. Its owners are seeking permission from the SEC, Financial Industry Regulatory Authority and National Futures Association to register another 100 million,” Jeff Kearns Reports From Bloomberg.

“There’s been a lot more interest in this ETF because investors are using it as a hedge on the dollar,” said David Stec, an ETF options trader at Group One Trading on the Chicago Board Options Exchange floor. “Yesterday, with the amount of options volume they saw, they probably have to add some shares. The ETF is based on the dollar versus a basket of currencies, so if there aren’t enough shares it might trade at a premium.”

“The fund, also known by its UUP ticker symbol, rose 1.9 percent to $22.94. The ETF surged from $22.49 when trading was halted at 1:06 p.m. The U.S. Dollar Index, a six-currency gauge of the greenback, added 0.1 percent to 75.72. Its price is 3.3 times higher than the UUP, down from a ratio of 3.36 yesterday and a 28-month high of 3.38 on Oct. 19,” Kearns Reports.

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The investment (UUP) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Long US Dollar Futures index. The index is comprised solely of long futures contracts. The futures contract is designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

The investment (UDN) seeks to track the price and yield performance, before fees and expenses, of the Deutsche Bank Short US Dollar Futures index. The index is comprised solely of short futures contracts. The futures contract is designed to replicate the performance of being short the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Chart for PowerShares DB US Dollar Index Bearish (UDN)

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