Halted: No More TVIX Shares, At Least Temporarily (TVIX)
Volatility ETNs have grown to be another controversial sub-sector of the exchange-traded products universe, but some of the products such as the VelocityShares Daily 2x VIX Short-Term ETNs (NYSE: TVIX) and the iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) have loyal followings with traders.
Well, if you're among the fans of the VelocityShares Daily 2x VIX Short-Term ETNs, hopefully you've already got some shares because Credit Suisse (NYSE: CS) issued a statement this evening saying it "has temporarily suspended further issuances of the VelocityShares Daily 2x VIX Short-Term ETNs...due to internal limits on the size of the ETNs."
Funds like TVIX have fans because they're fine for use as short-term trading instruments. Data on the VelocityShares Web says as much. From the TVIX Product Page: "The ETNs provide traders with an exchange traded instrument enabling them to efficiently express their market views on the short-term futures contracts on the CBOE SPX Volatility Index."
To be sure, long-term investors should and would find TVIX's 1.65% expense ratio unsavory. TVIX currently has 40.7 million shares outstanding, according to the VelocityShares Web site. TVIX debuted in late 2010.
"It is possible that the suspension, as described above, may influence the market value of the ETNs. Credit Suisse believes it is possible that the temporary suspension of further issuances may cause an imbalance of supply and demand in the secondary market for the ETNs, which may cause the ETNs to trade at a premium or discount in relation to their indicative value. Therefore, any purchase of the ETNs in the secondary market may be at a purchase price significantly different from their indicative value," Credit Suisse said in the statement.
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