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Capital Markets

Halo brings transparency to structured notes

The XIV note blow-up highlights risks lurking in the opaque market in structured notes, but also obscures potential benefits for a wider group of investors and issuers if the market could be opened up.

Tidjane-Thiam-2018-R-600

Tidjane Thiam, CEO of Credit Suisse



The long and largely uneventful life of the XIV – the VelocityShares Daily Inverse VIX Short-Term exchange-traded note (ETN) – and its sudden and fiery end at the start of February amid surging US stock market volatility provides a reminder of how big a business structured notes have quietly become in the years since the financial crisis.

Many banks now issue billions of dollars each year in such notes, tying in dependable intermediate maturity liabilities at low cost and often earning fat fees in the process. Monthly new issue volumes are measured in hundreds of billions of dollars.

Structured Retail Products puts the global market’s outstandings at $2.4




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