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Credit Suisse is defending a controversial financial product it issued that played a role in staggering market losses this week.

The Switzerland-based bank said it is experiencing no losses from its financial instrument — known as the VelocityShares Daily Inverse VIX Short-Term exchange-traded note (ETN), or XIV for short. Instead, it appears the fallout will be squarely borne by investors holding the product.

On Monday last week, as markets sold off and the Dow Jones industrial average plunged nearly 1,600 points in its biggest drop ever, many analysts pointed to the XIV as having amplified selling. This is because the product, managed by Credit Suisse and of which it owns 32 percent, shorts volatility by betting on calm market conditions. It has increased in popularity in the past year as volatility in the Cboe Volatility Index (VIX) — a fear gauge for the stock market — reached historic lows.

Because the XIV was designed to produce opposite returns of the VIX, when the volatility index shot through the roof Monday — a record 118 percent — the XIV went through the floor, down a devastating 90 percent. The ensuing negative feedback loop of selling is believed to have seriously exacerbated Monday’s market turmoil.

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