Industry Updates

Barclays to buy back $17.6bn of securities following admin error

The increased figure accounts for $2.8bn of ETNs

Theo Andrew

Securities and Exchange Commission

Barclays will buy back $17.6bn of securities that it sold in error after an administration mistake turned out to be bigger than first feared.

In March, the bank said it had issued $15.2bn more securities in the US than it was permitted to, however, Barclay’s said the amount has risen to $17.6bn after it found more securities it should not have issued.

The so-called recission offer amounts to $14.8bn of structured notes and $2.8bn of exchange-traded notes (ETNs).

It will commence on 1 August and be open for 30 business days and the bank has listed 3,000 securities it wishes to repurpose.

Barclays added it would resume the issuance of 27 of its ETNs from the same date. In May, Barclays halted trading on 30 ETNs as it looked to resolve the filing issue with the Securities and Exchange Commission (SEC).

It came after the UK giant halted new share creations of the iPath Pure Beta Crude Oil ETN (OIL) and the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) having first discovered the issue in March.

The original decision to suspend the ETFs led to severe swings in premiums to net asset values (NAVs). For example, VXX was trading at a record 24% premium at the time of the suspension, according to data from Bloomberg.

Barclays warned the resumption of the ETNs – which does not include VXX – could cause the premium or discount to decrease with the potential to incur “significant losses” on the investor.

“In particular, if an investor paid a premium purchase price over the indicative value of the resumed ETNs, it could lead to significant losses in the event an investor sells resumed ETNs at a time when such premium is no longer present in the marketplace or if Barclays redeems the resumed ETNs at its discretion,” it said.

Barclays had originally set aside £540m to pay for the internal blunder, however, this is likely to rise as markets have since fallen sharply with the bank admitting it was not fully hedged against the decline.

The bank is set to lay out the full impact of the mistake in its half-year results on Thursday. Both US and UK regulators are investigating the incident which could result in a fine for the bank.

Related articles

Featured in this article

Logo for Barclays


No ETFs to show.