Credit Suisse "Terminates" XIV

After it was halted for trading earlier in the day, which many saw as a harbinger of imminent termination - moments ago Credit Suisse confirmed retail vol sellers' worst fears when it announced that it would indeed be "accelerating" the XIV ETN, i.e. terminating it.

From the press release:

Credit Suisse AG Announces Event Acceleration of its XIV ETNs

New York February 6, 2018 Credit Suisse AG (“Credit Suisse”) today announced the event acceleration of its VelocityShares™ Daily Inverse VIX Short Term ETNs (“XIV”) due to an acceleration event. The acceleration date is expected to be February 21, 2018.

Since the intraday indicative value of XIV on February 5, 2018 was equal to or less than 20% of the prior day’s closing indicative value, an acceleration event has occurred. Credit Suisse expects to deliver an irrevocable call notice with respect to the event acceleration of XIV to The Depository Trust Company by no later than February 15, 2018. The date of the delivery of the irrevocable call notice, which is expected to be February 15, 2018, will constitute the accelerated valuation date, subject to postponement due to certain events. The acceleration date for XIV is expected to be February 21, 2018, which is three business days after the accelerated valuation date.

How much money will holders of the now defunct XIV get?

On the acceleration date, investors will receive a cash payment per ETN in an amount equal to the closing indicative value of XIV on the accelerated valuation date. The last day of trading for XIV is expected to be February 20, 2018. As of the date hereof, Credit Suisse will no longer issue new units of XIV ETNs.

Which is bad news for XIV holders, because as we showed last night, the NAV of the ETN crashed  to $4.22 yesterday from 108.36.

... effectively wiping it out, and assuring that longs get nothing in what was until recently one of the best performing investments in the market.

Full press release:

Comments

Newbie lurker jcaz Tue, 02/06/2018 - 09:24 Permalink

I will admit, I have no idea where this money ‘went’. Or is just lik value of your house....it is only worth what it sells for? Not what you A realtor says when he wants to list it for you.

 

The problem is when you hold these stocks and they fluctuate and value the number in your 401(k) account goes up and down. It should not move until you sell, that would make things a lot more realistic and honest. 

In reply to by jcaz

Haus-Targaryen Newbie lurker Tue, 02/06/2018 - 09:25 Permalink

So for everyone XIV "VIX Short" there is someone holding the opposite side of the trade, e.g., people holding the VIX long, which went up some 116% or so.  They made a killing yesterday. 

Then there is the simple fact of "mark-to-market" accounting, where if you buy something for $100 and the prices goes to $105, you think you have an asset worth $105 even though you haven't book your gains by taking money off the table.  Essentially, until you have the cold hard cash in your grubby little hands -- you simply hold some kind of accounts receivable from a third party with their own counter-party risk. 

Store your wealth in REAL things, such as gold, silver, art, land, real estate, fine wines, whiskey, future collectible cars, etc., etc., and make that your goal in building your wealth.  Store wealth in things that are REAL that will generate future cash flows for you.  Everything else is just some other form of receivable.   

In reply to by Newbie lurker

Haus-Targaryen gatorengineer Tue, 02/06/2018 - 09:31 Permalink

I appreciate that the XIV in no way directly corresponds to the VIX -- they're merely ETFs centered around giving one exposure to volatility; up or down -- but the two work inverse of one another -- and when one crashes the other moon shots, which is what happened.  

Those holding XIV long yesterday got wiped out, those holding VIX long did pretty well.  

If I am wrong, I'm all ears as to how.  I am by no means omnipotent and am still learning.  

Teach me something! :) 

In reply to by gatorengineer

Full Court Lug… Newbie lurker Tue, 02/06/2018 - 09:38 Permalink

There's an important truth to this. It's true that "a thing is worth what someone will pay for it", but you don't know what that number is until you actually sell, full stop.

Today they are saying "$4 trillion in wealth has vanished from the stock market". WRONG. People THOUGHT they had that $4 trillion, but when they went to sell, the bids were not actually there. "Paper profits" are just guesses of potential proceeds on sale, not a real measure of value.

In reply to by Newbie lurker

Dukes balz Tue, 02/06/2018 - 09:55 Permalink

“Why shouldn't it exist? It was all in the prospectus. Fools should be free to act as fools.”

What purpose does it serve?

How is that purpose any different from placing a bet at a casino?

 

Spin it however you like, it is definitely not a “financial instrument” with any other purpose than to extract money. No different than a casino. 

In reply to by balz

Tolomeo Tue, 02/06/2018 - 09:23 Permalink

Why not just reverse split it, so the party could continue down the road??? As it turns out, now, I’ll miss it when all this crazy shit blows by, the FED doesn’t raise rates and clubs VIX down back to 10!!! Still, jajajajajaja!!!

b-sugar Tue, 02/06/2018 - 09:23 Permalink

very good, fucktards only had that. shorting traders panic, what kind of rational hard working investor buys this shit?

stick to property titles & commodities.