The biggest inter-dealer broker in the world has launched services in crypto-linked exchange-traded products (ETPs), manifesting the growing mainstream adoption of digital assets, CoinDesk reported. The company has been trading on behalf of Goldman Sachs, Flow Traders, Jane Street, and other clients in Europe according to Simon Forster and Duncan Trenholme, TP ICAP digital assets’ co-heads, who talked to CoinDesk in an interview.
Trading equity products is ‘easiest’ way to gain exposure to digital assets
According to Forster, trading an equity-linked product on an exchange is probably the easiest way to gain exposure and get comfortable with digital assets. He added that the company was active in trading ETPs such as BTCE, ETC Group’s physical bitcoin product.
Huge demand for digital assets from institutions
The broker, which facilitates transactions between hedge funds, investment banks, and other big financial institutions, is not alone in responding to increased digital asset demand from institutional clients. Bank of America, UBS, and Goldman Sachs are all launching cryptocurrency ETPs for hedge-fund clients in Europe.
Last year, CoinDesk reported that Goldman Sachs’ prime brokerage unit was launching ETPs for some hedge funds in Europe, citing insiders. Goldman Sachs was offering these services only to a small number of clients at the time. They may begin to roll them out to a wider range of customers in the future, sources reported.
Exposure without direct investment
ETPs enable companies to gain exposure to the crypto market without making a direct investment in it. Instead, they invest through a security that tracks different asset performance. Forster admitted that the liquidity in some of the ETP products was not that impressive at the moment, but he expects the number of products to grow as more institutional funds enter the space.
TP ICAP to launch crypto ETP trading in US
In the next few months, the broker plans to launch trading of crypto-linked ETPs in the US. In 2022, they will focus on rolling out over-the-counter (OTC), digital asset-based derivatives. An OTC derivative, an example of which is a swap, is a financial contract set up and settled off an exchange.
Last year, TP ICAP announced a joint venture with Flow Traders, Zodia Custody, and Fidelity Digital Assets to launch a wholesale crypto trading platform. Also last year, the International Swaps and Derivatives Association (ISDA) created a working group to review crypto OTC derivative standards.