Velocityshares implosion puts leveraged ETNs in the frame

Credit Suisse’s recent move to suspend issuance of a popular exchange-traded note caused the value of the note to whipsaw, and the bank is being asked pointed questions by regulators. Other dealers accuse the bank of mishandling the situation and claim it could endanger the wider ETN industry. Mark Pengelly reports

In the space of four trading days in late March, shares in a Credit Suisse exchange-traded note (ETN) collapsed from $15.13 to $5.88 - a 61% drop that dwarfed the 35% fall in the underlying index the product was meant to track. That has left some investors planning legal action and regulators trying to work out exactly what happened. But for now, rival dealers offer their own, blunt explanation - that the product became a victim of its own success.

"The Credit Suisse ETN is an extremely volatile