Bad Timing Again! First Platinum ETNs Now Available

May 9, 2008

SAN DIEGO - (ETFguide.com) – NYSE Euronext (NYX) today announced that UBS listed the first exchange traded investment products linked to platinum in the U.S. on NYSE Arca. 

Linked to the performance of a sub-index of the UBS Bloomberg Constant Maturity Commodity Index (CMCI), the E-TRACS UBS Bloomberg CMCI Long Platinum ETN (Ticker: PTM) and the E-TRACS UBS Bloomberg CMCI Short Platinum ETN (Ticker: PTD) are designed to be a representative of the entire liquid forward curve of platinum contracts.

The index, which is rebalanced monthly, is comprised of the platinum futures contracts eligible for inclusion in the CMCI with a single target maturity of three months.

Barclays Global Investors had attempted to launch a platinum linked ETF similar to its Gold Trust (Ticker: IAU) and Silver Trust (Ticker: SLV). Rumor has it that BGI was confronted with opposition from the platinum industry, which was concerned that asset backed platinum ETF would drive up platinum prices.

The E-TRACS solved this problem as the ETNs are based on futures contracts, which tend to settle in cash without immediate effect on the price of platinum.

Since ETNs are debt securities, credit issues risk should be a concern for investors. The Wall Street Journal reported that U.S. prosecutors are investigating if UBS was involved in tax-evasion schemes carried out through Liechtenstein, a European principality located between Austria and Switzerland.

UBS just can’t get their timing right. The launch of their first eight E-TRACS came on the heels of major subprime, home loan related write offs. The bank has written down some $38 billion and reported a quarterly net loss of $10.97 billion.

New E-TRACS:

UBS existing line up of ETNs are based on a very unique security selection and weighting method. The below described methodology applies to the E-TRACS Industrial Metals, E-TRACS Energy, E-TRACS Agriculture, E-TRACS Livestock and E-TRACKS Food.

Security Selection and Weighting:

For a commodity contract to be included in the CMCI, certain primary and secondary criteria have to be fulfilled, such as technical characteristics and financial thresholds. The weighting process for the CMCI is designed to reflect the economic significance and market liquidity of each commodity. A two-step approach is used to determining target weights of the futures contracts in the CMCI. 1) Regional Consumer Price Indexes (CPI), Producer Price Indexes (PPI) and Gross Domestic Product (GDP) data are used to produce the Economic Weight (EW) of each of the sub-sectors of the CMCI. 2) The market value of the amount of each commodity that is consumed is used to calculate the individual instrument weight of each commodity, based on such market value as a percentage of the total market value of the consumption of all commodities included in the relevant sector. The CMCI Governance Committee reviews the weightings of the futures contracts in November and May.

Changes in the Weights and/or CMCI Composition:

As noted above, the CMCI Governance Committee (in consultation with the CMCI Advisory Committee) reviews the selection and weightings of the futures contracts in the CMCI bi-annually, in November and May, or at any special meeting called by the CMCI Advisory Committee. Thus, weights are potentially reassigned whenever a regular or special meeting of the CMCI Governance Committee is held, subject to ratification by the Index Sponsors.

Previously issued E-TRACS:

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