/biz/ - Business & Finance

>>18597814
It's quite concerning how nobody seems to know what this means.

A share of an ETF = a bundle of shares of stocks that constitute the ETF. To prevent mispricings where the cost of a share of the ETF =/= the cost of the underlying assets, the ETF issuer (ie the licence holder/manager of the ETF and its constituents, but not at all necessarily the owner of the actual shares) allows designated market makers (Jane Street, Citadel, IMC, etc) to have the ability to collect the individual stocks that underly the ETF, hold those stocks and create a share of the ETF (on the condition that they do not sell the corresponding underlying assets unless a corresponding ETF share is destroyed). Additionally, the same market makers have the ability to buy an ETF and return the underlying stocks.

The point of this is to enable arbitrage to occur to prevent misspricings.

What I think

"suspending the ability of USO Authorized Purchasers to purchase new creation baskets until such time as the new USO registration statement for the additional shares has been declared effective by the SEC."

means is that the ETF issuer/license holder, USO, is suspending authorised purchasers, market makers who purchase the ETF stocks and convert/return it into its underlying stocks, from doing this.

This is probably because people are dying to get out of the ETF because I imagine that some of its assets are worthless whereas some are not and people want to sell the ones that are not worthless. Because of crazy market conditions this is bad for everyone blah blah panic blah.