This week one of Europe's largest speed trading platforms and exchange-traded fund (ETFs) dealers, Flow Traders NV, announced the firm is entering the cryptocurrency space by offering bitcoin and ethereum exchange-traded notes (ETNs) to its clientele.
According to Sweden-based exchange XBT Provider which also offers ETNs in that country, says, the move by the Dutch exchange will now allow it prime itself up to dramatically increase securities and trading.
Flow Traders decided to make the move into crypto following a tough 2017 that saw trading volumes in its core ETF market taking a big hit.
"People underestimate crypto. It's big, and it is about to be regulated very soon". Market participants are much more professional than people think.
Nienke Torensma, a spokeswoman for the AFM, said in a statement: "By virtue of its newness and the anonymity it potentially offers, it is very prone to abuse". A spokes person for the AFM said, "Given bitcoin inability to serve the promised objective as a currency, we don't regard it to be an asset class". They are not able to prevent firms from trading regulated assets on a regulated exchange.
More notably, giving institutional investors the ability to trade crypto ETNs or funds in the cheap and straightforward manner of conventional fiat trades could positively affect the popularity of digital assets trading. "Institutional investors are interested - we know they are because we get requests", Dijkstra said in an interview with Bloomberg.
Flow Traders will try to hedge every trade it executes, as quickly as possible.
Laurent Kssis, managing director at XBT Provider stated, "With the growing interest from institutional clients willing to invest in digital assets, I can see why so many proprietary trading businesses are now focusing on this new asset class". Ironically, the Amsterdam-based speed trader has entered into cryptocurrency arena when its regulator continues to campaign against trading cryptocurrencies. To do this, Flow Traders is hedging its ETN with CME and CBOE futures contracts, which should lower slippage while increasing liquidity. For example, Goldman Sachs Group Inc. has chose to set up a digital-asset trading desk. According to Torensma, cryptocurrency regulations need to be finalized worldwide.
The five big USA speed traders are already into crypto markets and they are also exploring the possibilities in cryptocurrency futures and underlying currencies.