ETF Securities Limited ("ETF Securities") is pleased to make the following announcement regarding the securities ("Commodity Securities") issued by ETFS Commodity Securities Limited ("CSL"), which are backed by matching contracts from AIG Financial Products Corp. ("AIG-FP") whose obligations to CSL are guaranteed by American International Group, Inc (collectively with AIG-FP, "AIG").
As previously announced, AIG-FP and CSL have signed agreements between each other and with The Bank of New York Mellon ("BNY Mellon") pursuant to which:
- Pursuant to its agreement with CSL, AIG-FP is required to post collateral covering not less than 100% of the daily mark-to-market value of all Commodity Securities in issue; and
- BNY Mellon, in its role as collateral manager, will hold the collateral in a separate account, into which AIG-FP must deposit the collateral and over which CSL may take control by delivering to BNY a notice of exclusive control.
Details of these agreements, including a description of the eligibility and rules for collateral, are set out in the following:
- A Supplementary Prospectus relating to a programme for the issue of ETFS Classic and Forward Commodity Securities by ETFS Commodity Securities Limited; and
- A Supplementary Prospectus relating to a programme for the issue of ETFS Short and Leveraged Commodity Securities by ETFS Commodity Securities Limited.
These have been approved by the UK Listing Authority and are available on our website and on the FSA document viewing website.
In accordance with the abovementioned agreements, on 20 October 2008 AIG posted collateral covering in excess of 100% of the value of all Commodity Securities on issue (calculated as of the previous days' close).
Going forward, the collateral will be valued each business day by BNY Mellon utilising generally recognized pricing information vendors, subject to an agreed dispute mechanism, and AIG-FP is required to transfer additional collateral if the value of the collateral in the account falls below the value of all Commodity Securities in issue.
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.
