From FT Alphaville:
Bloomberg reports the United States Natural Gas exchange traded-fund, which has been buying Nymex and ICE natural gas swaps since at least the beginning of June, has now been pushed into the world of OTC bilateral swaps.
As the agency writes:July 24 (Bloomberg) — United States Natural Gas Fund, the world’s largest fund in the commodity, bought an off-market gas swap for the first time in a sign that it has outgrown the main markets for fuel futures and swaps. The $4.4-billion fund purchased a $250 million bilateral swap that isn’t subject to the size limits imposed by the New York Mercantile Exchange, where the fund holds $480-million worth of natural gas futures and swaps.This is hugely significant due to the nature of the OTC market, its liquidity and
also its positioning out of regulatory reach. For an ETF like the UNG, this also
generates important questions about transparency, and counterparty risk....MORE