Flow Traders, the largest European exchange-traded fund (ETF) trader, has entered the crypto world, becoming the first firm in the world to disclose it’s buying and selling crypto notes listed on regulated stock exchanges.
Flow Traders is a leading global technology-enabled liquidity provider, specialized in Exchange Traded Products (ETPs). Founded in 2004, the company is based in Amsterdam. Flow Traders uses its principal technology platform to quote bid and ask prices in thousands of ETP listings, as well as similar financial products, and provides liquidity to institutional counterparties off-exchange across all regions.
In the first quarter of this year, the Dutch firm traded 244 billion euros ($284 billion) of ETFs globally, including 143 billion euros in Europe, making it the region’s biggest trader of the securities.
Earlier, the Dutch Authority for the Financial Markets (AFM) warned customers to stay away from cryptocurrency trading. “We discourage activities in cryptos both by consumers and professional license holders,” Nienke Torensma, a spokeswoman for the AFM, said. “By virtue of its newness and the anonymity it potentially offers, it is very prone to abuse. Given its inability to serve the promised purpose as a currency, we don’t regard it to be an asset class.”
Despite these warnings, Flow Traders has expanded its trading products to exchange-traded notes (ETNs) based on Bitcoin and Ethereum. According to XBT Provider, an issuer of crypto ETNs listed in Sweden, the Dutch company has “dramatically increased” trading of its securities in the last few months.
Dennis Dijkstra, the co-CEO of Flow Traders, said:
“People underestimate crypto. It’s big, and it is to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested – we know they are because we get requests.”
“The biggest thing is keeping the regulators on board.”
The principal difference between ETFs and ETNs is that ETFs are investments in funds that track the price movement of an asset, whereas ETNs are more like investing in bonds. However, both ETNs and ETFs provide a much more viable option for investors than the usual cryptocurrency trading market.
The company plans to hedge the trade as quickly as possible in spite of Bitcoin and Ethereum price fluctuations. To do this, Flow Traders is hedging its ETN with CME and CBOE futures contracts, which should lower slippage while increasing liquidity.
Many banks, investment firms, and exchanges make their moves to push into the fledgling cryptocurrency space as well. Recently, the Toronto Stock Exchange (TSX) started trading a new blockchain-based exchange traded fund on its platform. As was reported by Coinspeaker, the new blockchain ETF was aimed at providing investors with an exposure to companies operating within the rapidly developing blockchain industry.