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Can EFTs go negative? Serious question. After seeing CLK20 drop below zero, I am a bit unsure about my USO position. Also, what's the default mechanism of an ETF? Which part of '40 funds act regulates the case of possible liabilities emerging from the assets?

If someone can provide a bit of background instead of a simple yes/no.

Bython
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  • No. I am looking for the precise mechanism and section of respective act. If the NAV of my ETF drops below 0, am I as a share holder liable for this? – Bython Apr 21 '20 at 18:52
  • The first part of your question is addressed in the dupe. It might be a good idea to edit to focus more on the second half. – glibdud Apr 21 '20 at 20:08

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ETF Net Asset Value vs. ETF Market Price: What's the Difference?

ETF Market Price An exchange-traded fund's market price is the price at which shares in the ETF can be bought or sold on the exchanges during trading hours.

As long as there is a seller and a buyer, both of them willing to accept a negative price, you have the ETF going below zero. It does not mean that the NAV is negative although.

Also and the opposite is true as well - you can have an ETF with positive prices and negative NAV (no assets to back up the price).

John
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