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Credit Suisse Fund Liquidated, ETFs Halted as Short-Vol Bets Die

  • More than a dozen ETPs were suspended from trading Tuesday
  • VelocityShares-branded ETN will be called Feb. 21, bank said
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Bloomberg’s Jan-Henrik Foerster reports on what’s changing at Credit Suisse.(Source: Bloomberg)
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The fallout from the implosion of a vast array of arcane bets against stock-market volatility mounted quickly Tuesday as Credit Suisse Group AG moved to liquidate one investment product and more than a dozen others were halted after their values sunk toward zero.

For the flood of investors -- including novice retail types -- who had piled into what has come to be known simply as the short-vol trade, it was a devastating blow after they had successfully squeezed profits out of the eerie calm that had overtaken stock markets in recent years. The end to that tranquility came fast, with the benchmark Cboe Volatility Index soaring as much as three-fold in just three days as $3 trillion was wiped from equities amid signs the U.S. economy could be overheating.