Credit Suisse Is Said to Consider Redemption of Volatility Note
. Credit Suisse Group AG is considering buying back one of its exchanged-traded notes after volatility soared, triggering losses for the holders who had bet on muted market swings, according to a person familiar with the situation.Two of Credit Suisse’s exchange traded notes mirror the inverse performance of the Cboe volatility index, which on Monday soared by the most on record.The VelocityShares Daily Inverse VIX Short-Term ETN, known by its trading symbol XIV, dropped 14 percent during the session on Monday and its net asset value plunged more than 80 percent in late trading, according to data compiled by Bloomberg.It was halted from trading Tuesday.A final decision on redemption hasn’t been made, the person said, asking not to be identified because the discussions are private.The bank has not suffered any trading losses related to exchanged-traded note, the company said in a statement Tuesday.The Swiss lender was the biggest holder on the note with 32 percent at the end of the third quarter.The ETN had a market value of about $2.2billion at its record high on Jan.11.Betting against volatility has become a popular money-making strategy in the years since the financial crisis, with banks and other financial companies offering a plethora of ’short-vol’ products.But exchange-traded notes and funds that give investors a quick and easy way of entering the trade have also been criticized for their risks.BlackRock Inc.has been calling for regulation that would clearly spell out the dangers associated with such inverse and leveraged exchange-traded products.Credit Suisse, as the issuer of the note, can redeem it before the Dec.4, 2030, maturity date under certain conditions, including events that adversely affect its ability to hedge.That includes instances in which the intraday indicative value is equal to or less than 20 percent of the prior day’s closing indicative value, according to the prospectus.The surge in volatility has already claimed one victim: Nomura Europe Finance announced the early redemption of its Next Notes S&P 500 VIX Short-Term Futures Inverse Daily Excess Return Index ETN, which had 32.4billion yen ($297 million) in assets.Credit Suisse shares fell as much as 8.5percent in Tuesday’s trading in Zurich and were 3.
Liked on YouTube: Credit Suisse Is Said to Consider Redemption of Volatility Note via YouTube https://youtu.be/4Q0Jt1Xg8bg
. Credit Suisse Group AG is considering buying back one of its exchanged-traded notes after volatility soared, triggering losses for the holders who had bet on muted market swings, according to a person familiar with the situation.Two of Credit Suisse’s exchange traded notes mirror the inverse performance of the Cboe volatility index, which on Monday soared by the most on record.The VelocityShares Daily Inverse VIX Short-Term ETN, known by its trading symbol XIV, dropped 14 percent during the session on Monday and its net asset value plunged more than 80 percent in late trading, according to data compiled by Bloomberg.It was halted from trading Tuesday.A final decision on redemption hasn’t been made, the person said, asking not to be identified because the discussions are private.The bank has not suffered any trading losses related to exchanged-traded note, the company said in a statement Tuesday.The Swiss lender was the biggest holder on the note with 32 percent at the end of the third quarter.The ETN had a market value of about $2.2billion at its record high on Jan.11.Betting against volatility has become a popular money-making strategy in the years since the financial crisis, with banks and other financial companies offering a plethora of ’short-vol’ products.But exchange-traded notes and funds that give investors a quick and easy way of entering the trade have also been criticized for their risks.BlackRock Inc.has been calling for regulation that would clearly spell out the dangers associated with such inverse and leveraged exchange-traded products.Credit Suisse, as the issuer of the note, can redeem it before the Dec.4, 2030, maturity date under certain conditions, including events that adversely affect its ability to hedge.That includes instances in which the intraday indicative value is equal to or less than 20 percent of the prior day’s closing indicative value, according to the prospectus.The surge in volatility has already claimed one victim: Nomura Europe Finance announced the early redemption of its Next Notes S&P 500 VIX Short-Term Futures Inverse Daily Excess Return Index ETN, which had 32.4billion yen ($297 million) in assets.Credit Suisse shares fell as much as 8.5percent in Tuesday’s trading in Zurich and were 3.
Liked on YouTube: Credit Suisse Is Said to Consider Redemption of Volatility Note via YouTube https://youtu.be/4Q0Jt1Xg8bg
Commentaires
Enregistrer un commentaire