European derivatives exchange Eurex is to launch bitcoin exchange traded note (ETN) futures, a new contract that offers clients access to the price of bitcoin in a regulated on-exchange and centrally cleared environment.
The offering, set to make its debut on 12 September, will be the first regulated market in bitcoin-related derivatives in Europe.
They will be based on the Frankfurt Stock Exchange-listed BTCetc Bitcoin Exchange Traded Crypto
According to Deutsche Börse Group’s derivative arm, BTCE has been one of the most heavily traded contracts on Xetra since its June 2020 introduction.
The contract will be traded in euros and physically delivered in bitcoin ETNs.
Both the underlying ETN, as well as the futures, will trade, clear and settle on Deutsche Börse’s infrastructure.
The firm said it will benefit from Eurex’s standard clearing, netting, and risk management processes which helps mitigates counterparty risk and reduces operational costs for market participants.
“The Bitcoin ETN was equivalent to 1/1000th of a bitcoin at launch and is fully backed by and redeemable in bitcoin,” according to Eurex.
Randolf Roth, Member of the Eurex Executive Board, says the product is in response to the “significant demand from institutional investors to gain Bitcoin exposure in a secure and regulated environment. “
He adds, “We are pleased to be the first regulated exchange to offer this innovative contract. The new Bitcoin ETN futures enable investors to trade and hedge bitcoin within Eurex’s proven trading and clearing infrastructure without the need to turn to unregulated crypto venues or set up a separate infrastructure, such as a crypto wallet. It is the logical extension of the ETN that already trades very successfully on Xetra.”
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