Credit Suisse is pulling the plug on an investment product that just got wiped out with the stock market's drop
- Credit Suisse is pulling the plug on the VelocityShares Daily Inverse VIX Short-Term ETN, or XIV, which had bet on lower volatility.
- The exchange-traded note was popular last year amid the market's unprecedented calm.
- Credit Suisse is the largest investor in the XIV.
Credit Suisse is pulling the plug on a popular investment product that had bet on lower volatility.
The bank said Tuesday that it saw an "irrevocable call notice" on the VelocityShares Daily Inverse VIX Short-Term ETN, or XIV, in which it was the largest investor.
The exchange-traded note is designed to return the inverse performance of CBOE's volatility index, which saw its largest increase on record Monday amid a 4% plunge in stocks.
The firm will no longer issue new units of the exchange-traded notes, and expects that its last day of trading for XIV will be on February 20. The following day, investors will get a cash payment per ETN equal to XIV's value, Credit Suisse said.
On Monday, the note, along with the ProShares Short VIX Short-Term Futures ETF(SVXY) wiped out nearly $3 billion, according to Macro Risk Advisors. Both had profited from the market's calm in 2017.