The New York Stock Exchange has filed for permission to launch some Bitcoin-related exchange-traded funds (ETF) just one week into this year, 2018.
As it has been reported by BusinessInsider, a filing sent to the United States Securities and Exchange Commission shows that the exchange has the intention to launch five different ETFs, offering ‘bull and bear’ futures contracts on the Arca stock exchange.
Those ETFs are going to be linked with the price of Bitcoin futures that were listed on the CME and CBOE exchanges, which launched Bitcoin futures contracts in December 2017:
The target value of the benchmark will be calculated as the last sale price which has been published by the CME or the CBOE or any other US exchange which subsequently trades bitcoin futures contracts on or before 11 a.m. E.T.
– Bull funds
There are three ‘Bull Funds’ which are categorized as 1.25X, 1.5X and 2X, offering 100%, 150% and 200% returns on the given contract.
As it has been stated in the document sent to the SEC, the funds are not intended to be traded any longer than one day – and give percentage returns, which are based on the presented agreement inserted into:
As stated by the Registration Statement, the 1.25X, 1.5X, and 2X Bull Fund seek daily leveraged investment results, which relate in a positive way to either 125%, 150% or 200% the daily return of the target benchmark.
But, investors also stand a chance of facing the same multipliers in loses, should the market move against their contracts:
Conversely, its value on a certain day should lose about 1.25 times, 1.5 times or 2 times, as applicable, as much on a percentage basis as the level of the target benchmark when the benchmark declines.
As the name suggests, the ‘Bears Funds’ permit investors the chance to leverage against a decline in the Bitcoin value.
The two funds offered are 1X and 2X, offering 100% and 200% gains should the contract meet its target on the day when the trading will happen.
Also, should the benchmark rise in value, Bear Fund investors stand to suffer some losses compounded by the multiplier (1X or 2X) they have agreed to, as per the description of the 2X Bear Fund:
If the 2X Bear Fund is very successful in meeting its investment objective, its value on a certain day should gain approximately two times as much on a percentage basis as the level of the target benchmark, when the target benchmark will decline. Conversely, its value on a certain day should also lose approximately two times as on a percentage basis as the level that the target benchmark has when it rises.
Keeping up with the game
Should the NYSE be allowed to launch these ETFs, they will also be the third American exchanges to offer Bitcoin futures contracts.
CME and CBOE have been trading these futures since December 2017.
Spending no time in addressing their application to the SEC, this move also shows that there is lots of interest in Bitcoin by Wall Street money.
While the likes of Merrill Lynch have denied its financial advisors from offering the clients Bitcoin-related investments, exchanges are looking forward to setting up of various offerings.
Once when some ETFs and trading options are opened for a while, there is going to be more information on how properly these options are trading.
Given that knowledge, could we see a change in sentiment by financial institutions whose clients are looking to enter the market of cryptocurrency?