On October 23, 2017, Barclays Bank PLC as index sponsor (the “Index Sponsor”) of the Barclays Global Carbon Index Total ReturnTM (the “Original Index”), announced that the Original Index will be retired effective October 27, 2017. The iPath® Global Carbon ETN (the “ETNs”) are currently linked to the performance of the Original Index. The Original Index is being replaced with a successor index, the Barclays Global Carbon II TR USD Index (the “Successor Index”) effective after the close of October 27, 2017. Pursuant to the terms of the ETNs, Barclays Bank PLC as calculation agent on the ETNs has approved the Successor Index as a successor index for the ETNs following the discontinuation of publication of the Original Index.
October 27, 2017 will be last valuation date on which the closing indicative value of the ETNs will be calculated by reference to the Original Index. Starting from October 30, 2017, the ETNs will be linked to the performance of the Successor Index and the closing indicative value and redemption value of the ETNs will be calculated by reference to the Successor Index.
Both the Original Index and the Successor Index have the objective of providing exposure to the global price of carbon and track the return of futures contracts on a carbon emissions credit that trade on the Intercontinental Exchange (“ICE”). The differences between existing and successor indices include those summarized below:
- The Successor Index determines the weightings of the Index Components on an annual basis without the use of the Index Committee that was used by the Original Index to approve the rules, composition and methodology of the Original Index. The method for determining the composition and weighting of the Successor Index is intended to codify the process undertaken by the index sponsor to determine the composition and weighting of the Original Index.
- The futures contracts eligible for inclusion as Index Components in the Successor Index include futures contracts on carbon emissions credits from only two mechanisms: EUAs and CERs (each traded on ICE). Although the Index Components of the Original Index historically included only futures contracts relating to these two mechanisms, the Original Index provided that the index sponsor, in consultation with the Index Committee, could identify additional mechanisms to which the Original Index could provide exposure.
The closing value of the Successor Index will be calculated and published on each trading day by Bloomberg L.P. or a successor via the facilities of the Consolidated Tape Association under the ticker symbol “BXIIGC2T”. The closing value of the Original Index has been previously published under the ticker symbol “BXIIGCUT”.
We intend to treat the replacement of the Original Index with the Successor Index under the terms of the ETNs as not triggering a deemed taxable exchange of the ETNs for U.S. federal income tax purposes. However, there is no authority directly on point, and the Internal Revenue Service could conceivably assert that the index replacement should trigger a deemed taxable exchange of the ETNs for U.S. federal income tax purposes. In such a case, U.S. holders of the ETNs would generally be required to recognize gain (if any) or—subject to the potential application of the wash sale rules—loss (if any) when the Original Index is replaced with the Successor Index under the terms of the ETNs. U.S. holders of ETNs should consult their tax advisors regarding the tax consequences to them of the replacement of the Original Index with the Successor Index under the terms of the ETNs.
The ETNs are listed on the NYSE Arca stock exchange under the ticker symbol GRN. An investment in the ETNs involves significant risks, including possible loss of principal, and may not be suitable for all investors. The ETNs are riskier than ordinary unsecured debt securities and have no principal protection. The ETNs are speculative and may exhibit high volatility. The ETNs are also subject to certain investor fees, which will have a negative effect on the value of the ETNs.
For further information, please contact the Barclays ETN desk at 1-212-528-7990.
The prospectus for the ETNs to which this communication relates can be found at: http://www.ipathetn.com/grnprospectus
Selected Risk Considerations
An investment in any ETNs linked to the iPath® Global Carbon ETNs (the “ETNs”) involves risks. Selected risks are summarized here, but we urge you to read the more detailed explanation of risks described under “Risk Factors” in the applicable prospectus supplement and pricing supplement.
You May Lose Some or All of Your Principal: The ETNs are exposed to any decrease in the index level between the inception date and the applicable valuation date. Because the ETNs are subject to an investor fee and any other applicable costs, the return on the ETNs will always be lower than the total return on a direct investment in the index components. The ETNs are riskier than ordinary unsecured debt securities and have no principal protection.
Credit of Barclays Bank PLC: The ETNs are unsecured debt obligations of the issuer, Barclays Bank PLC, and are not, either directly or indirectly, an obligation of or guaranteed by any third party. Any payment to be made on the ETNs, including any payment at maturity or upon redemption, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due. As a result, the actual and perceived creditworthiness of Barclays Bank PLC will affect the market value, if any, of the ETNs prior to maturity or redemption. In addition, in the event Barclays Bank PLC were to default on its obligations, you may not receive any amounts owed to you under the terms of the ETNs.
Carbon Market Risk: Trading in futures contracts on carbon emissions commodities, including trading in the index components, is speculative and can be extremely volatile. The commodity futures markets are subject to temporary distortions or other disruptions due to various factors, including the lack of liquidity in the markets, the participation of speculators and government regulation and intervention. Market prices of the index components may fluctuate rapidly based on numerous factors including but not limited to changes in supply and demand, domestic and foreign political or government actions and technological developments. These factors could adversely affect the value of the underlying index and, therefore, the value of your ETNs. Cap & trade mechanisms have arisen primarily due to relative international consensus on the correlation between the rise in greenhouse gas emissions and the onset of global warming. Accordingly, changes in regulation and enforcement of cap & trade mechanisms as a result of changes in international consensus can adversely affect market behavior and the value of the ETNs.
Market and Volatility Risk: The market value of the ETNs may be influenced by many unpredictable factors and may fluctuate between the date you purchase them and the maturity date or redemption date. You may also sustain a significant loss if you sell your ETNs in the secondary market. Factors that may influence the market value of the ETNs include prevailing market prices of the U.S. stock markets, the index components included in the underlying index, and prevailing market prices of options on such index or any other financial instruments related to such index; and supply and demand for the ETNs, including economic, financial, political, regulatory, geographical or judicial events that affect the level of such index or other financial instruments related to such index.
No Interest Payments: The ETNs will not pay out any periodic interest payments
Trading Market for the ETNs May Not Develop: Although the ETNs are listed on NYSE Arca, a trading market for the ETNs may not develop and the liquidity of the ETNs may be limited, as we are not required to maintain any listing of the ETNs.
Restrictions on the Minimum Number of ETNs and Date Restrictions for Redemptions: You must redeem at least 50,000 ETNs at one time in order to exercise your right to redeem your ETNs on any redemption date. You may only redeem your ETNs on a redemption date if we receive a notice of redemption from you by certain dates and times as set forth in the pricing supplement.
Uncertain Tax Treatment: Significant aspects of the tax treatment of the ETNs are uncertain. You should consult your own tax advisor about your own tax situation.
The ETNs may be sold throughout the day on the exchange through any brokerage account. Commissions may apply and there are tax consequences in the event of sale, redemption or maturity of ETNs.
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Andrew Smith, +1 212 412 7521