Volatility-tied note that crashed was meant for hedge funds: Credit Suisse CEO

Credit Suisse Group CEO Tidjane Thiam said an exchange-traded note tied to volatility that lost most of its value last week is a tool created for hedge funds and professionals. "This is a daily trading tool for very sophisticated investors, to help them manage their daily trading risk," Mr. Thiam said in an interview on Bloomberg Television Wednesday, citing the note's prospectus. "You should not invest in it for any period of time superior to one day, because you risk losing all or a substantial portion of your investment." (More: Wall Street's volatility time bomb) Credit Suisse said it will buy back the VelocityShares Daily Inverse VIX Short-Term ETN, known by its trading symbol XIV. The fund's market value topped $2 billion in late January before losing more than 90% of its value last week. Credit Suisse shut down the product because there is no prospect of price recovery and will compensate investors on Feb. 21. The Swiss bank produced the notes, which were then sold by third parties to market makers, Mr. Thiam said. The company warned in the prospectus that the product has "zero long-term value," he said. (More: Exchange-traded notes add another layer of risk)