First a little glossary;

ETP stands for Exchange Traded Product which usually refers to anything that can be traded, typically instruments managed by issuers but could technically include equities and commodities.

ETF stands for Exchange Traded Fund. These are regulated instruments that must be backed with the underlyings, or something equating them, that they track. So the issuer of SPY (State Street Global Advisors) actually holds shares of the individual equities that make up the S&P 500. Similarly, ProShares holds VX futures contracts to back their volatility ETFs; UVXY, SVXY, and VIXY

ETN stands for Exchange Traded Note. These instruments are a debt note backed by the credit worthiness of the issuer. While the issuer will often hedge their risk, they are note required to hold shares like issuers of ETFs are.

What’s my risk here?

Both types of ETPs carry issuer risks that are detailed in their prospectus, but ETN reliability has been suspect for volatility traders in recent years.

TVIX at 2x leverage became the darling after UVXY delevered from 2x to 1.5x, but it’s abandonment by Credit Suisse effectively killed it (along with DGAZ, UGAZ and many other popular symbols) as a viable symbol to trade.

Barclays VXX administration issue revealed in 2022 left them without the ability to create shares to meet demand, causing it to drift from its daily NAV.

The original issuance period of VXX ended in 2018 and a ‘new’ VXX was created to take its place. Trying to chart VXX prior to 2018 can now be a frustrating practice on most platforms.

ETFs aren’t immune

Issuer risk still exists with ETFs, such as delevering, but have generally been more reliable than their ETN counterparts. A common question usually goes: “will UVXY get delisted like TVIX?” and while not impossible, history has shown it to be less likely than an ETN

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