A Very Broken Day For One ETF

October 16, 2014

Yesterday’s broken trades highlight why smart trading matters.

Everyone saw that yesterday was a volatile day. But the overall market volatility was nothing compared with what we saw in the Credit Suisse FI Large Cap Growth Enhanced ETN (FLGE).

You can be forgiven if you’re not familiar with the ticker: FLGE launched just this past June, providing double-leveraged exposure to the Russell 1000 Growth Index. But despite being new, it’s already a classic broken ETN.

Finding information out about the ETN is nearly impossible—it’s not even listed on Credit Suisse’s own page. If you go to the bank’s website and type in the ticker, you’ll get no results. If you call the Credit Suisse help desk, they’ll let you know that while it’s their debt, they don’t even have fact sheets or prospectus documents available, because the fund was made specifically for Fisher Asset Management, Ken Fisher’s firm.

The only way to figure out what the thing even does is by trolling the SEC filings for the original paperwork.

Barely On The Rails

In the months after launch, the fund had a little bit of outside interest, and even racked up a few 100,000-share trading days. But spreads have been enormous—more than 10 percent in some cases—and volume has plummeted to the few-thousand-shares-a-day range.

If you looked at FLGE on the close yesterday, you wouldn’t notice much interesting. After all, it closed right around fair value. But here’s what the intraday chart looks like:

FLGE_trading

Clearly something interesting happened around 2:25 p.m. ET, as there’s a print on the tape for far under fair value. But it’s much worse than that. This is the corrected version of what happened. But that chart looks actually sane compared with what happened with the bid and the ask for shares of FLGE during that period:

 

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