Credit Suisse Group AG’s VIX Short-Term ETN (XIV) Plummets

Credit Suisse Announces VelocityShares™ Daily Inverse VIX Short-Term ETN (NASDAQGM:XIV) Trading Will Stop February 20, 2018

CNBC reported (“Credit Suisse says it will end trading in the volatility security that’s become the focus of this sell-off”) that February 20, 2018 will be the last day of trading for VelocityShares™ Daily Inverse VIX Short-Term ETN (XIV), a security which fell approximately 85% in after-hours trading on February 5, 2018 and closed 93% down on February 6, 2018.

According to CNBC, “Credit Suisse said it will end trading in a security that some investors believed was exaggerating movements in volatility futures markets and even the overall stock market.” CNBC reported that Credit Suisse

. . . is triggering this liquidation because the product during these last three volatile days could not keep up with the scenario it was supposed to track: a calm market.

The security is supposed to give the opposite return of the Cboe Volatility index (VIX), the market’s widely followed turbulence gauge. The VIX’s value exploded higher, topping 50 Tuesday, which in theory should have wiped out most of the value of the VelocityShares ETN.

Multiple exchange-traded securities that are also supposed to be bets on calm markets were halted Tuesday after losing the majority of their value overnight.

[Emphasis added]

Yahoo! Finance published an ETF Trends.com article (“Amid Volatility Surge, Credit Suisse Terminates VelocityShares ETN”) which reported that

[o]ne of the hottest trades in recent memory, shorting volatility, evaporated in a heartbeat on Monday.  In the aftermath of an unexpected volatility explosion, Credit Suisse is moving to terminate the VelocityShares Daily Inverse VIX Short-Term ETN (XIV).

The VIX, or so-called fear index, is a widely observed indicator for investor sentiment in the stock market and measures the expected or implied volatility of large-cap stock options traded on the S&P 500 index. ETPs that track VIX futures allow investors to profit during rising volatility or hedge against short-term turns.

Amid Monday’s plunge in U.S. stocks, the VIX surged, but volatility exchange traded notes, such as XIV have a unique feature: The indexes these products track settle after the close of U.S. markets. In after-hours trading Monday, XIV suffered catastrophic losses. The ETN’s market closing Monday was $99, but its closing indicative price as listed on the VelocityShares website was just $4.22.

Kehoe Law Firm, P.C. is investigating whether the investment strategies utilized by investment firms were appropriate for XIV investors, margin loans collateralized by XIV or other investment advice related to XIV investments.  If you invested in VelocityShares™ Daily Inverse VIX Short-Term ETN (NASDAQGM:XIV) and have questions or concerns, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].

Kehoe Law Firm, P.C.