UWTI And DWTI Will Be Delisted Today, Here’s What You Need To Know

Two highly popular triple leveraged oil ETPs will be delisted today, perhaps marking the beginning of the end for a whole slew of similar products that have drawn criticism from regulators.

It’s the final day of trading on the NYSE for the VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:UWTI), which provides triple leveraged bullish exposure to oil futures, and the VelocityShares 3X Inverse Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:DWTI), which offers triple leveraged bearish (inverse) exposure.

Both products will continue to trade over-the-counter (OTC), but fund manager Credit Suisse will no longer issue their exchange-traded notes. That essentially means the products “will no longer have an active arbitrage mechanism to keep the price and net asset value aligned,” according to ETF.com.

The bottom line is, anyone who owns these two products should liquidate their positions immediately, before a large number of potential problems begin to arise. A lack of liquidity and a heavy discount or premium to underlying net asset value (NAV) are just a couple of the issues that will manifest themselves after delisting.

Credit Suisse still hasn’t commented on why they’re closing the products, which had close to $2 billion in assets under management combined as recently as last month. However, it’s not difficult to speculate that recent regulatory investigations into UWTI, DWTI, and similar leveraged products had a lot to do with it. Officials are understandably worried that the products don’t operate as advertised, and while that may be true, all investing involves risk and thus the caveat emptor (“buyer beware”) disclaimer applies — whether we’re talking about leveraged funds, options, stocks, bonds, or any other form of investment.

For traders that insist on leveraged exposure to oil prices, don’t fret. New products are coming soon that will fill the void in your risk-craving heart. In the meantime, the UCO is a double leveraged bullish oil product to consider.