He said the notes are debt market analogs to products that bet on or against equity market swings based on the CBOE Volatility Index.
ETNs are, unlike their exchange-traded fund cousins, debt obligations of their issuer and do not provide investors the same legal protections. The new notes are guaranteed by Citigroup Inc.—while VelocityShares markets the notes—and come with a 1.5 percent annual fee. Citigroup declined to comment about the ETN's launch.
The ETNs can lose value over time regardless of the direction of Libor.
"It's going to be a big wealth transfer from the unsophisticated to the sophisticated," said Dillian.
This article was provided by Reuters.