GraniteShares 3x Short Rolls-Royce crash

Thanks for sharing your action too. Obviously this ETP has caused many disruption to many of us, and I hope Trading212 can work with we investors to seek some justice over here. Otherwise if an legal approach has to be used, both Trading 212 and Graniteshares may have to be joint liable. Let’s see any of us will receive a formal explanation from Graniteshares tomorrow. If not please feel free to message me your email and I can gather all information together for us to issue a formal letter to Graniteshares, then either legal or FCA Ombudsman

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sent an email.

"Hello,

I have a holding for the Graniteshares 3x Short Rolls-royce Daily Etf (3SRR) in Trading212 platform.

At approx. 3.13pm today (28-Oct-2020) 3SRR share price dropped from 46.1 to 15.8 at 3.18pm even though the Rolls Royce share did not change.

This makes no sense whatsoever as is it supposed to track the Rolls Royce share price as per the GraniteShares page here:

I have not been notified of any reason why this would happen after the Rights Issue and would like an explanation please.

Thanks"

Well done, thanks for reaching out already. Please keep us updated and we will take it from there .

Let’s wait until tomorrow as some of us have already approached Graniteshares. I personally spoke to their staff this afternoon and was told they did some intraday stock loss protection adjustment which I have not been aware of how and when this will happen in advance so I believe they have either done something internally without giving investors adequate advice in advance or they had system error. Let’s see if new update tomorrow then you can reach me via message with your email address and I can put everyone in the same email group.

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I have also pasted the same email to trading212 & graniteshares.

I have also just seen on Twitter that graniteshares say there will be official explanation early tomorrow so check their Twitter account for the link.

P.S if the explanation is not adequate then I would very much like to join group for legal action.

Thank you for the update!

Just noticed this thought. I was doing some calculations and the only time it could be true was when RR price went to about 95p-100p and that was about 10:30 am. If that didn’t trigger a intraday reset for 3SRR then it’s their system failure however I did try to add more ETP when the price drop to 20p (RR price about 98P) , but trading 212 couldn’t process my order until the price readjusted to 25-28p so I guess maybe intraday reset may have already taken effect at certain point which stopped accepting my orders.

Even it might be the reason RRN took longer time to register with LSE, then that means the opening price wouldnt be adjusted to £0.7515 or LSE shall be liable for the delay of index tracking with Graniteshares? And why 3LRR didn’t have same impact to increase their gains at the time when 3SRR was adjusted with lost? … I guess only Graniteshares can answer this myth.

Guys please follow this link

So far only one reply was indicating what may come out:

The index intraday stop loss was triggered during the day, which changed the reference price level - we will publish the info on the website tomorrow. As an FYI, had it not been triggered the ETP would have subsequently become worthless when $RR hit 101p.

My question is still the same how the hell they randomly trigger their stop loss rather according to the actual $RR price. The stop loss should have been triggered in the morning not after 3pm!!! This does make a lot of difference as many investors started buying from the morning up until 3pm having no idea they would trigger a random adjustment at a time when $RR price is not tracked anymore. It’s a product fault.

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I’m not liking the look of that response. I hope the formal update on their website is a lot more detailed and contains actual factual information as opposed to “it would have been worthless”.

Apologies in advance as this in unfamiliar territory for me. Who is responsible for the error for today? I myself bought at 2.30pm and this was accepted. Should this have not been allowed based on the intraday recalculation, if it was too happen should it have already occurred at 11.30? Why did it continue trading until the drop between 11.30 and 3.30? I’m just trying to understand if this is the fault of granite or another stakeholder.

Exactly, I’ll need to see their full statement. My gut feeling is they will present the case like because they didn’t suspended the trading and some people may have bought at lower price so they needed to adjust the pricing to recover their lost or something… Which of course won’t be accepted. If it’s their fault not suspended trading while opening other investors to adding positions, this was entire wrong.

Same question from many other investors, we need a full statement from them and it has to satisfy us.

I believe this is the update from granite on the issue.

'The index rules stipulate that, after a stop loss event, a “new trading day” should begin using the levels at which the index rebalanced as a reference. Consequently, the 3SRR price after 11:10 should have been based on the following formula:

3SRR after 11:10 = 12.49p * (1 – 3 * (Rolls-Royce price / 95.18p -1 ))’

‘1. In order to avoid executing the bid price at price well above the actual ETP value, the market maker requested the security to be suspended. However, because trading was taking place in an orderly manner (i.e. there were market participants posting bid and ask orders), the London Stock Exchange advised that there was no basis for a suspension of trading.’

I am also loosing massively, no clear answer by Grenaiteshare.

At some point it was showing only -£13.00 in loss. To adjust average I started to buy more shares and at one stage it show me I am loosing only £2:00. And suddenly loss came to -£116:00.

I guess till around 13:55 pricing we’re around £0.49p. At around 15:00 I added limit buy @ £0.20 but ended up getting it for £0.15p. Even this time market value were showing as £0.43p. I guess market value should have been changed same time as original shares price were getting changed.

Due to wrong price information/indication investors ended up with big loos.

Same here. Sent email too. And count on me too to join the group for legal action

I’m taking the key line from this to be

'Consequently, the 3SRR price after 11:10 should have been based on the following formula:
3SRR after 11:10 = 12.49p * (1 – 3 * (Rolls-Royce price / 95.18p -1 ))’

It should have done, but wasn’t until 3.30

I’m also keeping a close eye on this thread, the explanation of the ETF would be worthless if Rolls-royce traded over 100p, that’s not even 300p adjusted (pre rights issue) so why does it matter if the short goes low? That’s the risk we all took, when it went down to 27p when RR hit over 100 I (and I’m sure many others) bought more to average down knowing that it was a crazy surge that wasn’t sustainable.

It’s not up to the people managing it to wipe out the value of the fund, someone has literally pocketed thousands of pounds of my hard earned money and no one gives a shit, it’s fraud in the purest sense of the word, everyone needs to open a complaint with the FCA, if they have enough people bothering them they will investigate.

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Guys I don’t want to be a negative nancy but you are talking about “bringing action” (via complaint or court) against an ETF manager, about how they manage their ETF?

I’m not 100% sure on legalities but you’d better lawyer up, if you are expecting anything. They could fill the ETF with sand and afterwards give an explanation like “oops”

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If you think that adjusting a stock listing, ETF or not, 7 hours into a trading day is legal or morally right then you’re clueless. You’re not being a negative Nancy, you’re just not understanding the gravity of the situation, the ETF was literally wiped out independently of the share it was meant to be tracking, that money didn’t just stop existing mate, that was money that I and many others have worked hard to earn that someone has just pocketed.

As other’s have stated the ETF has algo’s written in to account for the RI by RR, they knew this would happen, so the idea they couldn’t have forseen the adjusted share value going over 100 is mental, anything is possible in stock trading that’s the point.

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I don’t understand about the stop loss trigger they are trying to say caused this, because Rolls Royce shares haven’t increased dramatically only slightly, nothing we’ve not seen before, they are at a similar price when you take the rights issue impact into account as before! Obviously the stop loss was a bug in their software that hasn’t taken the adjustment into the calculation, why they didn’t suspend trading I don’t know, then allowing people to continue to buy knowing they had a fault is just criminal