Spectrum Markets, a pan-European trading venue for securitised derivatives, has widened its product offering to include cryptocurrencies as an underlying, with turbo warrants on Bitcoin and Ethereum now available. The new products expand Spectrum’s existing suite of Turbo24s and allow brokers to offer their clients long or short leveraged exposure to the price of the two most popular cryptocurrencies.
This marks the first time financial institutions can offer European retail investor clients the opportunity to trade turbo warrants on cryptocurrencies, on-venue, 24 hours a day, five days a week.
Being able to trade overnight is particularly relevant for retail investors looking at this asset class because it allows them to reduce the gap risk presented by the 24-hour nature of cryptocurrencies, while trading on a regulated venue offers greater transparency and investor protection compared to many alternatives.
Using derivatives to access cryptocurrencies also means investors don’t need to maintain a separate crypto wallet, and enjoy greater assurances over the safer custody of their assets.
Tools to hedge cryptocurrency exposure
“We are proud to continue our track record of innovating to provide a better way for Europe’s retail investors, and this launch responds to very strong demand for versatile exposure to cryptocurrencies,” said Nicky Maan, CEO of Spectrum Markets. “As well as being an easy way to access cryptocurrencies via their broker with a limited outlay, the Turbo24 products provide investors with tools to hedge exposure and better control their risk in what is, after all, a highly volatile asset class. We firmly believe there will continue to be a role for digital assets in retail investor portfolios, and we look forward to introducing further innovations and opportunities in this space.”
The knock-out function inherent to turbo warrants, through which the instrument is automatically terminated when the underlying asset hits a specific price, enables investors to effectively limit their exposure, while Spectrum’s 24-hour trading reduces gap risk, where investors lose out if asset prices change significantly while other venues are closed.
The ability to take short positions also enables investors to benefit from declining prices, and provides a valuable means of hedging long exposure as part of a wider trading strategy.
Regulated by BaFin and MiFID II compliant, the exchange uses a uniquely open architecture system to allow investors to trade with increased choice, control and stability. Through its pan-European ISIN, 24/5 trading services and its own proprietary venue, Spectrum enables a guaranteed baseline level of liquidity over a range of products and is able to swiftly and safely match a significant number of orders and process multiple quotes every second.