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ETF Securities confirms collateral backing for Commodity Securities ETCs

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ETF Securities has announced the posting of collateral by American International Group, which guarantees contracts from AIG Financial Products that back the range of exchange-traded commod

ETF Securities has announced the posting of collateral by American International Group, which guarantees contracts from AIG Financial Products that back the range of exchange-traded commodity products issued by ETFS Commodity Securities.

AIG Financial Products and ETFS Commodity Securities have signed agreements between each other and with Bank of New York Mellon under which the AIG subsidiary is required to post collateral covering not less than 100 per cent of the daily mark-to-market value of all Commodity Securities in issue.

BNY Mellon, in its role as collateral manager, will hold the collateral in a separate account, into which AIG Financial Products must deposit it and over which ETFS Commodity Securities may take control by delivering to the bank a notice of exclusive control.

Details of these agreements, including a description of the eligibility and rules for collateral, are set out in supplementary prospectuses relating to the issue of classic and forward ETCs and of short and leveraged ETCs by ETFS Commodity Securities.

On October 20, AIG posted collateral covering more than 100 per cent of the value of all Commodity Securities ETCs on issue as of the previous days’ close. In future, the collateral will be valued each business day by BNY Mellon using recognised pricing information vendors, subject to an agreed dispute mechanism, and AIG Financial Products must transfer additional collateral if the value of the collateral in the account falls below the value of issued ETCs.

ETF Securities continues to emphasise that AIG has continued at all times to honour all of its obligations with regard to Commodity Securities, including processing all creations and redemptions in the usual manner and paying all redemptions due on time.

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