ETN (Exchange Traded Notes, stock notes) – unsecured promissory notes, the value of which is linked to the price of a certain asset (a basket of stocks, bonds, commodity futures or cryptocurrencies).
One of the factors that affect the value of ETN is the credit rating of the company issuing such tools. In other words, the price of an exchange note may fall due to a decrease in the issuer's credit rating, even if there are no changes in the underlying index.
ETNs are also traded on the stock exchange, but the main difference between them and ETFs is that the issuer does not have to buy and hold any assets to track the price of the index. The main risk when working with notes is related to the probability of default of the issuer.
Some ETNs follow a predetermined leverage index. This means that the issuer undertakes to pay a multiple of the increase or decrease in the index.
An example of such tools in the context of the cryptocurrency market is stock exchange notes on Bitcoin from the Swedish company XBT Provider , which allow investing in a basket of 5 or 10 assets.
In August, USD-linked bitcoin notes appeared in the Nasdaq Stockholm listing . However, these ETNs fell out of favor with the SEC , which found that the XBT Provider sowed confusion with terminology. The Commission ordered the suspension of trade in these instruments in the US market.
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