New US tax rules could hamper ETN market, dealers warn

IRS’s forthcoming Section 871(m) rules could inadvertently capture legacy ETNs

dollar taxman
High-delta ETNs with equities and certain master limited partnerships as underlyings could be captured

US tax regulations aimed at preventing withholding tax avoidance on equity derivatives may inadvertently capture a huge chunk of the exchange-traded notes (ETN) market, including those initially issued many years prior to the rule's implementation, dealers have warned.

Section 871(m) of the Internal Revenue Code, which comes into full effect in January 2017, imposes a 30% withholding tax on dividend-equivalent payments from delta one-like equity-linked investments (ELIs) held by non-US persons.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: