#Canada #Toronto #BMO #GDXD #FNGD

BMO's Strategic Move: Reverse Splits of ETNs

On January 28, 2026, the Bank of Montreal (BMO) made headlines with its announcement of upcoming reverse splits for two of its Exchange Traded Notes (ETNs)—GDXD and FNGD. This significant decision aims to adjust the trading structure of these ETNs, effective at the market open on February 9, 2026.

Understanding Reverse Splits

Reverse splits are financial maneuvers where a company reduces the number of its outstanding shares, in this case, ETNs, while increasing the individual share price. BMO's announcement details the following:

• - MicroSectors™ Gold Miners -3X Inverse Leveraged ETNs (GDXD): A reverse split ratio of 1-for-10.
• - MicroSectors™ FANG+™ Index -3X Inverse Leveraged ETNs (FNGD): Also a 1-for-10 reverse split ratio.

Impact on Investors

For investors holding GDXD and FNGD before the effective date, the implications of the reverse split are critical to understand. For example, an investor with 100 ETNs prior to the reversal will find themselves holding only 10 ETNs post-split, but the value of each will adjust accordingly to maintain the aggregate investment value.

Investors not holding a divisible number of ETNs will receive a cash equivalent for any fractional ETNs they possess after the split. This cash payment will be calculated based on the closing Indicative Note Value on February 18, 2026.

Market Dynamics and Trading Adjustments

As the ETNs transition to this new structure, they will start trading on NYSE Arca on a reverse split-adjusted basis. This adjustment means that holders will continue to use the same ticker symbols—GDXD and FNGD—while the CUSIP numbers will change. It’s an important move as it addresses trading denominations, without altering the overall principal value.

BMO emphasizes that these ETNs are crafted for experienced traders, intended for daily market strategies rather than long-term investment. The design offers a leveraged short exposure, allowing sophisticated investors to manage immediate risks effectively. However, it comes with significant volatility risks, urging investors to monitor their holdings closely.

Conclusion

BMO's reverse split of its Exchange Traded Notes signals a notable shift aimed at refining trading instruments for sophisticated investors. As the effective date approaches, it remains vital for current and potential investors to stay informed about these changes and their potential impacts. Understanding these financial moves can help ensure prudent investment decisions within a rapidly evolving market landscape.

Investors are advised to consult the relevant prospectus documents for additional insights and potential risks associated with ETNs, ensuring an informed approach as market dynamics shift accordingly.