“Crazy” products like the one that contributed to the recent market volatility need to be regulated, former financial regulator Bart Chilton told CNBC on Wednesday.
“Even Vegas … they haven’t come up with as wild of bets as we have for these ETNs,” said Chilton, referring to exchange-traded notes.
Both trade using leverage and provide inverse returns to the market’s “fear gauge” known as the Cboe volatility index — the VIX. When the VIX falls, the two products rise. When the VIX soared Monday, both securities suffered severe losses.