Announcement - GraniteShares 3x Short Tesla ETP

[Marcraffard]

Dear IG traders,

GraniteShares would like to inform you about our decision to consolidate the GraniteShares 3x Short Tesla ETP (3STS). For every 1,500 ETPs owned, investors will receive 1 new ETP in exchange.

Investors already invested in 3STS will own fewer ETPs than before the consolidation but the Value per ETP will be proportionally higher. As a result, there will be no impact on the value of your investment. If the consolidation results in any fractional securities, they will automatically be redeemed in cash.

The record date for the consolidation will be on 14th May 2021 with the consolidation date effective on 17th May 2021. Proceeds linked to fractional ETPs are expected to be transferred to the clearing systems on 19 May 2021. Please note it may take a few days for the payment to be received.

GraniteShares believes it is in the investors’ interest to keep ETP prices within efficient trading ranges, and to try and avoid situations where ETP prices become too low or too high.

GraniteShares will not charge any commissions or fees related to the consolidation of securities or disbursement of the payments if fractional securities are involved.

Please refer to the following link for more information: https://graniteshares.com/institutional/uk/en-uk/research/3sts-reverse-split-effective-17-may-2021/

In case of any additional questions, please let us know.

[Guest Chief]

The recent 3STS split may be a halving of potential gains when looked at from a market crash perspective. Consider the example below where I have compared a pre-reverse split price and post reverse split price based on 1,275,000 units consolidated into 850 units post reverse split. It appears that the holder may be at a disadvantage after the reverse split should market conditions be adverse under the leveraged 3STS security. The gains are lower in terms of value after consolidation and much higher at pre- reverse split. This comparison is based on a 33.33% daily drop in Tesla which equates to a 100% rise in 3sts. It's a what if there was a 100% gain for 3 days scenario and what are the implications of a reverse split? 

Reverse split comparison
1,275,000 units | Day 1 | Day 2  | Day 3  
Before split | $0.014 | $0.028 | $0.056
Value           | $17,850 | $35,700 | $71,400
--------------------------------------------------------------------
   850 units   Day 1    | Day 2     | Day 3
After split    | $10      | $20        | $40
    Value        | $8,500 | $17,000 | $34,000

[Marcraffard]

I already answered on Reddit, but I am happy to share also the answer here 😉

As indicated on GraniteShares’ website, “Securityholders will own fewer ETP Securities than before the consolidation but the Value per ETP will be proportionally higher. As a result, the value of a Securityholder’s investment will not change […]. If the consolidation results in any fractional securities, they will automatically be redeemed in cash […].” Note that each is supported by example on the website.

The amount invested will not drop from $17,850 to $8,500 after of the reverse split. It will not change, saved for eventual fractional securities.

The objective of the product remains the same as well and its performance will not be affected by the reverse split.

As a reminder 3STS tracks, excluding fees and other adjustments, the performance of the Solactive Daily Leveraged 3x Short Tesla Inc Index that seeks to provide -3 times the daily performance of Tesla Inc shares.

Edited May 17, 2021 by Marcraffard

[Guest Aleksandr]

It is not about halving the amount of money. Like you mentioned (17850 to 8500) it is about number of shares if I had 225000 shares now I have only 150. Although the value remain the same. The future returns are significantly lower.

from 225000 shares at a price 0.007 if it increase daily by 10% in 90 days this would make around 1m

but given 150 shares at a price of 6 if increase by 10% daily  then need  almost 150 days to get around 1milion.

granite shares just made a trick, this is my opinion.

not gonna buy any more of their product 

 

[Plok]

Number of securities before 225000 price 0.007

if daily increase 10% for 60 days

0.007*1.1^60= 2.131 then multiply by number of shares 2.131*225000 =479558

after consolidation 

Now I received 150 shares instead at a price 6 

6*1.1^60= 1826.8 then multiply by number of shares 1826.8*150 =274033

the question: how does consolidation benefits me as a security holder?

[Plok]

When Tesla start falling they decided to make consolidation. After two month the Tesla will fell by half. This would increase price for Etp. So it wouldn’t be too low price. There is no any benefit from this consolidation to holders.

and there is absolutely no need to consolidation.

there is a trick behind it. Granite shares just mad a trick to grab the capital.

 

[RO1982]

Your consolidation has reduced the number of units I own as described, but the prices are still pre reverse split, so the value of my holdings has reduced considerably. I also can't trade this online and it took me an hour to speak to customer services yesterday.

When will this be fixed please?

Thanks

[Marcraffard]

[UPDATE] 3STS – Tesla Short -3x ETP

 

Dear IG Traders,

As you may know, this Monday, a reverse split have been done on 3STS. Following this reverse split, the London Stock Exchange have halted Trading on 3STS after GraniteShares noticed that depositaries and clearing house did not made all payment.

We are doing all we can to ensure that third parties can rectify the situation as soonn as possible, so that trading can resume quickly.

Unfortunately, we do not expect trading this morning at the opening of the London Stock Exchange. We will keep you informed as soon as trading will resume.

IMPORTANT - Value per ETP Security as of 18 May 2021 => $11.80693516

More information about the Reverse Split: https://www.graniteshares.com/institutional/uk/en-uk/research/3sts-reverse-split-effective-17-may-2021/

3STS (Value): https://www.graniteshares.com/institutional/uk/en-uk/etps/3sts

This is the same situation for 3STE (EUR) and 3STP (GBP).

[Marcraffard]

Dear IG Traders,

 

London Stock Exchange confirmed book should reopen tomorrow morning (20^th of May 2021).

Trading will resume tomorrow morning at the regular market opening hours.

For more information, a notice has added on regulatory news section of website ref. 3STS : https://graniteshares.com/institutional/uk/en-uk/research/graniteshares-financial-plc-the-issuer-graniteshares-3x-short-tesla-daily-etp-securities-the-etp-securities-notice-of-consolidation-of-securities/

More information about the Reverse Split: https://www.graniteshares.com/institutional/uk/en-uk/research/3sts-reverse-split-effective-17-may-2021/

You can check tonight the latest Value per ETP of 3STS following that link: https://www.graniteshares.com/institutional/uk/en-uk/etps/3sts

Official announcement by the LSE can be found via this link: https://www.londonstockexchange.com/resources/london-stock-exchange-notices?tab=2021

We apologize for the inconvenience caused by this issue and we remain at your disposal to answer your questions.

Best Regards,

Marc

[Marcraffard]

On 17/05/2021 at 17:34, Guest Aleksandr said:

It is not about halving the amount of money. Like you mentioned (17850 to 8500) it is about number of shares if I had 225000 shares now I have only 150. Although the value remain the same. The future returns are significantly lower.

from 225000 shares at a price 0.007 if it increase daily by 10% in 90 days this would make around 1m

but given 150 shares at a price of 6 if increase by 10% daily  then need  almost 150 days to get around 1milion.

granite shares just made a trick, this is my opinion.

not gonna buy any more of their product 

 

I understand your point of view, but doing the reverse split was something very important to do.

The price per ETP was as low as $0.0040 at some point and if the price was going below that, GraniteShares should have done an early redemption which would have been worse than the hypothetical scenario of declining profit for 90 days thereafter.

Early redemption mean that all position of all clients are closed and the product do not exist anymore. 

It would then have been necessary to wait two or three months for the product to be reissued on the London Stock Exchange.

[Marcraffard]

On 18/05/2021 at 01:24, Plok said:

 

and there is absolutely no need to consolidation.

 

As I said in my previous message, it was to prevent an early redemption.

I am pretty sure that an early redemption, closing all trade and making the product unavailable for minimum 3 month would have been much more annoying for investors.

[Marcraffard]

On 18/05/2021 at 09:17, RO1982 said:

Your consolidation has reduced the number of units I own as described, but the prices are still pre reverse split, so the value of my holdings has reduced considerably. I also can't trade this online and it took me an hour to speak to customer services yesterday.

When will this be fixed please?

Thanks

Hi RO1982,

Everything has been fixed Wednesday afternoon and the 3STS opened normally at LSE opening on Thursday morning.