Gate.io announces reverse splits for leveraged ETFs
Gate.io enhances ETF trading clarity
Gate.io has announced an upcoming share merge for several leveraged ETFs, scheduled for November 19, 2024, at 6:00 AM UTC, as part of its efforts to improve trading precision and user experience. This move is aimed at addressing issues arising from small share values that impact price accuracy and trading simplicity.
Key details of the share merge
The reverse split will affect the following leveraged ETFs: XRP5S, GALA5S, XLM3S, DOT5S, and AXS5S, Gate.io reports. For each of these ETFs, a 1-for-100 reverse split will be conducted. This means the number of ETF shares held by users will decrease to 1/100 of the original amount, while the unit value of each share will increase by 100 times. Importantly, the total value of users’ holdings will remain unchanged, excluding market-induced value fluctuations.
Impact on trading and market operations
Trading Suspension: One hour prior to the reverse split, Gate.io will suspend trading for the affected ETFs and cancel any open orders.
Trading Resumption: After the reverse split is complete, trading will resume, with prices fluctuating around the adjusted unit values.
Chart Adjustments: Users may notice a leap in candlestick charts post-split. Gate.io encourages using split-adjusted functionalities for smoother chart analysis.
These adjustments aim to improve market clarity, making it easier for users to trade without the complications associated with overly small share values.
What is a leveraged ETF?
Leveraged ETFs are designed to provide traders with magnified exposure to price movements of the underlying assets without requiring margin trading. These products are rebalanced to maintain a target leverage ratio when certain conditions are met. For example:
Profits are reinvested to expand positions.
Losses result in a reduction of positions.
Leveraged ETFs are managed within the perpetual contract market, where Gate.io charges a daily management fee to cover funding payments and trading fees. Unlike margin trading, there are no additional funding fees, making leveraged ETFs a cost-efficient option for traders seeking enhanced exposure.
Implications for traders
The reverse split process aims to streamline the trading experience for leveraged ETFs by improving price precision and simplifying transactions. While the total value of holdings remains the same, users are advised to closely monitor their trades during this period due to potential price fluctuations after the adjustment.
Let us remind you that Gate.io previously released major updates for its Gate Wallet app and Chrome extension, introducing a range of new features to enhance functionality and user convenience.
