Credit Suisse Publicly Announces Reopening Of TVIX Share Issuance, Hours After 'Private' Leak Crushes TVIX

Tyler Durden's picture

For those curious why it is that the TVIX experienced a 50% plunge earlier today, as described here, perhaps the question should be directed to the SEC who may be better suited to answer just who, when and why had advance knowledge of Credit Suisse's announcement, after the close, that it would "reopen issuance of the TVIX." And since this is a rhetorical question, perhaps a better one is why does one participate in a market in which the fine print is always ignored, and is always used against the retail investor. Not that there is anything wrong with that of course - after all caveat emptor. Especially when none other than one of Ben Bernanke's favorite scholars on shadow banking (i.e., forced complexity) Gary Gorton said the following: "Liquidity requires symmetric information, which is easiest to achieve when everyone is ignorant. This determines the design of many securities..." Alas, when it comes to novel instruments such as levered ETFs that work as a closed end mutual fund hybrid, except when they don't, the only one ignorant is you, dear retail investor. Cost to your P&L: 50% in one day. Finally if for some inconceivable reason that doesn't work, just call the Credit Suisse ETN desk at 212 538 7333.

From Credit Suisse

Credit Suisse Plans to Reopen Issuance of VelocityShares Daily 2x Long VIX Short-Term ETN (Ticker Symbol: “TVIX”) on a Limited Basis


New York, March 22, 2012 Credit Suisse announced today that it plans to reopen issuance of the VelocityShares Daily 2x VIX Short-Term ETNs (Ticker Symbol: “TVIX”) on a limited basis. The ETNs were temporarily suspended from further issuance by Credit Suisse on February 21, 2012 due to internal limits on the size of the ETNs. At present, the ETNs are trading at a premium to their indicative value.


Beginning March 23, 2012, Credit Suisse may from time to time issue the ETNs into inventory of its affiliates to make the ETNs available for lending at or about rates that prevailed prior to the temporary suspension of issuances of the ETNs. Also, beginning as soon as March 28, 2012, Credit Suisse may issue additional ETNs from time to time to be sold solely to authorized market makers. Credit Suisse may condition its acceptance of a market maker’s offer to purchase the ETNs on its agreeing to sell to Credit Suisse specified hedging instruments consistent with Credit Suisse’s hedging strategy, including but not limited to swaps. Any such hedging instruments will be executed on the basis of the indicative value of the ETNs at that time, will not reflect any premium or discount in the trading price of the ETNs over their indicative value and will be on terms acceptable to Credit Suisse, including the counterparty meeting Credit Suisse’s creditworthiness requirements, margin requirements, minimum size and duration requirements and such other terms as Credit Suisse deems appropriate in its sole discretion. This action does not affect the Early Redemption rights of noteholders as described in the pricing supplement. The other ETNs issued by Credit Suisse are not affected by this action.


As disclosed in the pricing supplement relating to the ETNs under the heading “Risk Factors—The Market Price of Your ETNs May Be Influenced By Many Unpredictable Factors,” the market value of the ETNs may be influenced by, among other things, the levels of supply and demand for the ETNs. It is possible that the reopening of the ETNs on a limited basis, as described above, may influence the market value of the ETNs. Credit Suisse cannot predict with certainty what impact, if any, the reopening described above will have on the public trading price of the ETNs. It is possible that the resumption of new issuances of the ETNs, even on a limited basis, could reduce or remove any premium in the trading price of the ETNs over their indicative value. Investors are cautioned that paying a premium purchase price over the indicative value of the ETNs could lead to significant losses in the event the investor sells such ETNs at a time when the premium is no longer present in the market place or the ETNs are accelerated (including at our option), in which case investors will receive a cash payment in an amount equal to the closing indicative value on the accelerated valuation date.


And just because there are never enough gullible gambling addicts out there, now that the TVIX is dead, presenting the VVIX. 

March 14, 2012
CBOE Introduces "VIX of VIX" Benchmark Index: Provides a Gauge for Measuring Volatility of the VIX Index Itself 
CHICAGO and BOCA RATON, Fla., March 14, 2012 /PRNewswire/ -- The Chicago Board Options Exchange (CBOE) announced today that it began publishing values for the CBOE "VIX of VIX" Index (ticker: VVIX(SM)) this morning.

As its name implies, the CBOE's VIX of VIX Index tracks the volatility of the CBOE Volatility Index (the VIX Index), the world's most widely-followed market volatility index.


"Volatility traders are intrigued with the ability to formulate new strategies based on the relationship between the VIX Index and the volatility of the VIX Index," CBOE Chairman and CEO William J. Brodsky said. "The fact that our customers were looking for a way to measure the volatility of the VIX shows just how far the VIX Index has come. We're thrilled to introduce a product that tracks the volatility of the world's most- watched volatility index."     


VVIX reflects the market's consensus of expected volatility of the 30-day forward price of the VIX Index and provides new information for investors looking to formulate trading strategies based on the relationship between the VIX® Index and the volatility of the VIX Index.


The Index offers investors a way to gauge the risk premium in VIX Index option prices, much like the CBOE's VIX Index reflects the risk premium in S&P 500 Index options (SPX) prices.


VVIX is calculated using the same methodology as the VIX Index, which is derived from the price of a portfolio of out-of-the-money VIX option puts and calls.


CBOE, known as the home of volatility indexes, currently publishes data on two dozen volatility-related benchmarks and strategies. In addition to the CBOE "VIX of VIX" Index, since early 2011 CBOE has added 12 volatility indexes and one volatility strategy index, and CBOE and CBOE Futures Exchange (CFE) have collectively added  six new volatility products.


VVIX chart

Finally, just in case there is any confusion how this crying game would end, here is what we said about the TVIX at its launch in November 2010. You were warned.

Presenting The TVIX: A Double Leveraged VIX ETF

Ever feel like this market just does not provide enough unique and suicidal ways for you to lose your hard stolen money within nanoseconds of trade execution? Never fear - here comes the TVIX, a levered third derivative bet on volatility: simply said, the TVIX will be the world's first double leveraged VIX ETF. According to the ETF creator, VelocityShares, "the TVIX and TVIZ ETNs allow traders to manage daily trading risks using a 2x leveraged view on the S&P VIX Short-Term Futures™ Index and S&P 500 VIX Mid-Term Futures™ Index, respectively, while the XIV and ZIV ETNs enable traders to manage daily trading risks using an inverse position on the direction of the volatility indices. The indices were created by Standard & Poor's Financial Services LLC, a division of the McGraw Hill-Companies, Inc." Then again, why not just call these what they are: a novel way (brought to you via the synthetic CDO legacy product known as ETFs) to lose money with a 99.999% guarantee. As always, we wonder why anyone would trade this product, when, with much better odds, one would at least get comped in Vegas...

Here is the full product suite about to launched by Credit Suisse.

One has to love the fine print:

The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage daily trading risks.  They are designed to achieve their stated investment objectives on a daily basis, but their performance over longer periods of time can differ significantly from their stated daily objectives.  Investors should actively and frequently monitor their investments in the ETNs. Although we intend to list the ETNs on NYSE Arca, a trading market for the ETNs may not develop. 

In this case, and as in everything else related to the market, our advice is stay away from these synthetic contraptions which are merely CDOs (and now CDOs cubed) for public consumption. On the other hand, we can't wait for someone to finally release an ETF or any other mechanism, that allows for the simple shorting of GM stock.

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wee-weed up's picture

Markets of the elites... by the elites... and for the elites...


Thank you sir, may I have another. 

Raymond_K_Hessel's picture

Boycott the rigged markets => Buy physical PM and wait for the collapse.

redpill's picture

I don't know how anyone could look at a chart of that Frankenfund and acutally want to buy a piece of the monster.


overbet's picture

So fucking corrupt. I mean I know elementary school children who could investigate and prosecute this bullshit better than the SEC.

Harlequin001's picture

So what's the problem, so all those insider dealers who thought they had fast track info got thrown a curved ball. So what.

Serves them right for even trying to trade such a corrupt market...

They should just buy gold...

Fuck 'em..

NumberNone's picture

Clearly Goldman isn't the only place that views retail investors as Muppets.

Savyindallas's picture

these "elites" need to have their nuts cut off  -literally.

JustObserving's picture

Rolling Stone
Gangster Banks Keep Winning Public Business. Why?
By Matt Taibbi
March 22, 9:40 AM ET

A friend of mine sent this article from Bloomberg, along with the simple comment: "Perfect." What's perfect? That the banks that have been caught repeatedly ripping off communities and munipalities -- banks that have paid hefty settlements for rigging bids, bribery and other sordid misdeeds -- keep winning the most public business. Apparently, our public officials aren't concerned about whom they hire to serve as the people's investment bankers.

The elites always win. Our corruption is complete. If the SEC and the CFTC are not aiding and abetting the criminal elite, they are busy watching porn.

spankthebernank's picture

It's funny to watch vxx faz etc...fall to single digits, then reverse split and do it all over again..unreal times people

ZeroPower's picture

TVIX is designed to go to zero. The worst part is, i am not at all being sarcastic.

slaughterer's picture

Self-congratulation: I warned about this right here at ZH last week.

Some conservative retail brokers have been prohibiting trading in TVIX for months now. 

The TVIX forward split should be 1:10.

5880's picture

Brodsky is such a nutsack

XRAYD's picture

UnF*ingReal!  UFR!

Bill D. Cat's picture

Unfortunately for me , this one is personal .

spankthebernank's picture

Robbery in broad daylight

With fine print....

LeBalance's picture


step 1: you bought a paper asset.

step 2: it depreciated.

your reaction: I was robbed.

my reaction: see step 1.

your reaction: I was robbed.

my reaction: W.C. Fields: "It is a Crime to leave the sucker with a cent of their money."

spentCartridge's picture

I prefer, same author : "Never give a sucker an even break".

Whatta's picture

Yeah, nothing like being correct in logic of a trade (buy volatility cuz the markets' finxin' to fall), and nonetheless get asshammered by corrupt people and products.


Silver stored in the closet. I see it. I can touch it, and even if it goes down in value...I still OWN it.

Wixard's picture

wow, have they no shame

max2205's picture

Proves the bull market is based on fraud protection to the fraudees.

Keep buying the dip till you see these guys in court. That'll be the top.

lizzy36's picture

These are horrific products.

They are not investments, they are gambling only products.


On the front page of the prospectus:



The ETNs are designed for investors who seek exposure to the applicable underlying Index. The ETNs do not guarantee any return of principal at maturity 

and do not pay any interest during their term. For each ETN, investors will receive a cash payment at maturity, upon early redemption or upon acceleration 

us that will be linked to the performance of the applicable underlying Index, plus a Daily Accrual and less a Daily Investor Fee (each as defined herein).

Investors should be willing to forgo interest payments and, if the applicable underlying Index declines or increases, as applicable, be willing to lose up to

100% of their investment. Any payment on the ETNs is subject to our ability to pay our obligations as they become due.






The long term expected value of your ETNs is zero. If you hold your ETNs as a long term investment, it is likely that you will lose all or a substantial portion of your investment.

That said, today's action was just good old fashion insider trading.

This is an example of why many investors want no part of this cesspool, known as the stockmarket. Confidence what is it good for?


Wixard's picture

Yea these are a hot potato but damn they pulled the rug out.

slaughterer's picture

The ETF/ETN prospectuses are sometimes longer and more confusing to read than the old prospectuses of the MBSs.  I still have a prospectus from Deutsche Bank for a now discontinued oil ETF that is over 600 pages. 

LeBalance's picture

well then, if they are Defined as Gambling Risk Level Products in the Prospectus, then there is No Issue with them is there?

I am Heroin.

I am the Lottery.

I am a Paper Asset.

I do not hide my nature, read my history and pedigree.


You did not read the manual?  It was provided was it not?


slewie the pi-rat's picture

rhetorical answer?  pelosi

Hedgetard55's picture

Folks, don't worry, all this shit won't mean a thing within two years, when the whole fucking shithouse comes crashing down on all of us.

Cursive's picture

There may or may not exist a parellel dimension where everyone works hard and is paid an honest wage in money whose value fluctuates very little, if at all.  A penny saved is a penny saved until you spend it (no time limits).  And there is no confiscatory tax code that rewards financial engineering such as offshore accounts.  Forget platitudes about world peace, find this place and we may well find world peace.

fishertodd's picture

In search of Galt's Gulch...

YesWeKahn's picture

TVIX is designed to be shorted, but it is very hard to find shares to borrow.

Cdad's picture

Umm...borrowing shares is for you, serf.  The big banks can do whatever they want, including selling shares of an equity or ETN, shares that do not exist.  How many millions of dollars were made on shares of Lehman that were shorted, shares that did not exist?  That question is just one of many that was not answered after that takedown and the resulting financial crisis.

This isn't a market anymore.  It hasn't been one for many years now.  And when it falls again, it will be because there is simply no one left that will have anything to do with it.  We are most of the way there, already.

Hedgetard55's picture



     Wanted to say I appreciate your posts and the common sense knowledge they contain. Soon we may not be in a position to be able to express these type of thoughts. Thank you!

Cdad's picture

We're all in this together, Hedge.  As for the day they stop letting us speak our minds, it will all be over then, anyway.  We're most of the way to that place, as well.

Cursive's picture


I would rather die on my feet than live on my knees.  I was thinking about that today and wondering if I would be saying it while staring down the barrel of gun.

Cdad's picture

I would rather die on my feet than live on my knees.


Agree entirely, Cursive.

slaughterer's picture

You can find shares of TVIX to short if you are willing to pay the steep commish. 

slewie the pi-rat's picture

cramer is an informationally symmetric ignoramus

i think this could be the key to his success...


Wixard's picture

Booyah! FYI check google, when Cramer tellsyou to GTFO its time to buy.

CvlDobd's picture

Tyler, don't make excuses for retail being left holding this bag of shit. You have warned on the dangers of levered ETFs many times here and I applaud you for that. Any ZeroHedge reader or investor in general that got burned on this deserved it.

Now before people go off junking me, think of it this way.

Run of the Mill ZeroHedge poster.

"Fuck Wall Street, bunch of crooks, stupid sheeple of America keep buying MMM stock like it is worth a shit! Dumbasses!"

Wall Street Insider says

"Hey look at those stupid bears (I'm a bear too, just not a suicidal one) lets sell them something we guarantee will go to zero and has no claim on any real asset. Think the bears will buy it from us?"

AND YOU BOUGHT IT! Hook, line, and sinker! At least the sheeple in 3M gets some dividends every now and then, and a sliver of ownership of 3M assets. What do you have Mr. TVIX bag holder? You sir are more greedy than any mom and pop sheeple!

I say this because I am very upset with the path the world is on and the destruction that TPTB are setting up. Most ZHers seem to be prudent and prepared and then they go fuck it all up trying to buy and hold levered volatility ETFs. I just can't get over how stupid that is!

Levered ETF holder fools > Buy and Hope Fools

Wixard's picture

Ive done okay by ETFs, they arent the problem. 

CvlDobd's picture

I agree to an extent. They aren't perfect but are useable.

I'm talking about levered ETFs. Especially on an index like the VIX. They are suicide machines for people with suicidal tendencies. PUNK ROCK!!!!!!!!!!!!!!!!!!

GoinFawr's picture

ETF's are all Jesse Livermore.

"There is only one side of the market and it is not the bull side or the bear side, but the right side. "

but I prefer  "On a long enough timeline..."

Tom Servo's picture

As long as you understand what you're purchasing, I agree.  I got blowtorched (as Robo would say) on FAZ once and that informed me that I cant focus on something that volatile and never touched it again.


(edit) - i closed my play trade account after mf global blew up in november.  Best decision I think I've made.  My economic malaise has gone down a lot.  Now, if i could only free up my 401k funds without getting fired or quitting.

Awakened Sheeple's picture

They're fine for day trading. A wild ride for sure.. I've had 20% up days and 15% down. I've got my phyzz, and what little debt I have is almost paid off. This is just play money at this point for me as there is no way I'll be able to buy farmland by the time SHTF. To each their own..

Atomizer's picture

LOL. Street side three card monty [card table] is on the run. FRN notes fallen from the shoebox will leave a trail to the new operation set point. Facefuck account opening will pave the way for peeps to advertise the new business entity. Sheer comedy.

throwthebumsout's picture

The TVIX is dead.  They will not get anyone to trust it.  I lost 50% and when it should have been going up.  These peope are assholes that ruined the business they are in.

slaughterer's picture

<omitted by author>  I do not want CS to sue me. 

FinLen's picture

Will the VXX blow up on friday becasue of this announcement?


monopoly's picture

Agree, I gave the bastards 30%, which came out to 5% of my total portfolio. As much as I hate these "elites", I still have to take the blame for the trade. I should have checked into this sooner. I did see something last week that they were not issuing shares but it did not click. 

Hey, i have lots of bad trades and about 2 or 3 a year like this. Always learning, even 25 years later. I never bet the farm and never buy on margin. So, I am still in the game, as rigged as it is. 

Tough market, don't care who you are.

CvlDobd's picture

How do you differentiate between margin and leveraged ETFs?