"The unexpected level of volatility has impaired the trading of the underlying derivatives used by many VIX-related exchange-traded products," said Horizons ETFs Management (Canada) Inc, which halted one of its volatility products and discouraged investors from buying another.
XIV closed down 14 percent on Monday, but then lost most of its remaining value in after-hours trading that evening.
XIV's prospectus spelled out the risks of an investment in the ETN, saying a large decline could result in its closure and its removal from the market.
"Upon such an event, your ETNs would be subject to acceleration and you will likely lose all or a substantial portion of your investment," the prospectus says. "The long term expected value of your ETNs is zero. If you hold your ETNs as a long term investment, it is likely that you will lose all or a substantial portion of your investment."
This story was provided by Reuters.