Last week, the $1 billion+ VelocityShares Daily 2x VIX Short-Term ETN (TVIX) was delisted as its issuer, Credit Suisse, decided to sunset the product along with a series of other gold, silver and natural gas ETNs.
Here's the twist with TVIX though. In cases like this, many issuers will close out the note and pay out the proceeds of the note closing per the product's agreement.
TVIX, however, isn't closing. It merely got delisted. Credit Suisse will not be redeeming the notes. I'll instead just let them die a slow death.
Without getting too far into the weeds, TVIX is an exchange-traded note, which means it essentially operates like a bond. Its stated redemption date is in 2030.
That means investors who still own shares after the delisting date can just wait for the note to mature in 2030 (at which time, Dave Nadig notes, "it’ll be worthless, with almost mathematical certainty") or they can try to trade them in the less-regulated over-the-counter market.
What To Expect Trading Securities In The OTC Market
When trading securities normally, through the NYSE or Nasdaq, for example, many take for granted the cheap and quick execution, the wide availability of buyers and sellers and the general ability to trade period.
Not necessarily so when trading in the OTC market (or pink sheets as they're often referred to).
There's far less liquidity there and there may not be a buyer or seller at all willing to take the other side of your trade. If there is, you may have to buy at a steep premium or sell at a steep discount in order to complete your trade. In other words, it can be costly and difficult.
20,000 Robinhood Accounts Own TVIX
Not to pick on Robinhood shareholders again, but it looks like many of them failed to close out their positions by the delisting date.
More than 20,000 accounts late last week still hold TVIX and probably thousands more outside of Robinhood.
The good news is that even though shares are delisted, they're not worthless. In fact, there may still be enough of a market for TVIX that you could still get fair value.
What TVIX Looks Like In The OTC Market
For one thing, it doesn't trade as TVIX any more. On the OTC market, it trades under the ticker "TVIXF". For all intents and purposes, it's the same security.
If you look at how it's trading on its first day, it doesn't look a whole lot different than it did before.
First thing to notice is the price. It hasn't plunged in the way that many securities relegated to the OTC market have. It's only down around 2% from last week's close.
The other is the trading volume. At mid-day Monday, it's already traded nearly 750,000 shares. Not exactly the lack of liquidity one might have expected.
If you own shares of TVIX at this point, the best thing you can do is check with your broker. I've read that some brokerages, such as TD Ameritrade, are having difficulty allowing investors to trade their shares. I've never owned TVIX and haven't traded on Robinhood or TD Ameritrade, so I can't speak first-hand about trading capabilities there.
Just be aware that you might need to jump through some hoops if you want to unload your shares. It won't be as easy as it was before!
More ETF Research
If you liked this article/video, please click the LIKE button or share it on Twitter, Facebook, etc. using the buttons below.
Feel free to leave any comments, questions, or thoughts on the ideas presented here (and sign-up if you haven't already).
Follow me and receive periodic notifications when I post here by clicking the FOLLOW button at the top of the page!