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.
Speed Trading Platform Flow Traders Enters the Cryptocurrency Trading Ecosystem
The Amsterdam market maker, Flow Traders, provides liquidity to its customers by providing traders bid and offer prices for Exchange Traded Products (ETPs). Flow Traders was founded in 2004 and has become one of the top ETP exchanges in Europe, pulling in over €250 million in revenue per year. Now the trading platform has announced it’s entering the cryptocurrency space by providing customers ethereum and bitcoin ETNs. According to Flow Trader’s Co-Chief Executive Officer Dennis Dijkstra, the company’s trade volumes have “dramatically increased.”
“People underestimate crypto,” Dijkstra explains during an interview on July 6.
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.
High-Frequency Traders Polarized by Bitcoin
Speed trading otherwise known as high-frequency trading (HFT) is a technique that uses algorithmic swaps to trade products at high speeds, and fast turnover rates. Typically HFT operations trade extremely large volumes of trades which in turn makes up the low margins offered by the exchange. Flow Traders is not the first high-speed trading company that’s entered the cryptocurrency ecosystem. Five well-known HFT dealers Tower Research, Susquehanna, Jump Trading, DRW Holdings, and Hudson River are selling cryptocurrency products to clients as well. The proprietary trading firm DRW Holdings claims its been swapping cryptocurrencies since 2014.
“What’s surprising me is how polarizing bitcoin is,” Bobby Cho the head of over-the-counter trading DRW’s OTC subsidiary Cumberland Mining.
Everyone has a viewpoint on bitcoin, whereas with other asset classes you either care or you don’t care.
Focusing on the New Asset Class
Flow Trader’s Dijkstra details that the firm has been hedging its bitcoin (XBT) and ethereum ETNs with CME Groups and Cboe’s XBT products. The XBT provider’s managing director at Coinshares Ltd., Laurent Kssis, says with firms like Flow Traders purchasing ETNs they continue to see steady institutional demand for their cryptocurrency exchange-traded notes.
“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,” Kssis added.
What do you think about Flow Traders getting into dealing with cryptocurrency ETNs and futures products? Do you think more HFT platforms will flock to digital assets? Let us know your thoughts on this subject in the comment section below.
Images via Shutterstock, and Flow Traders.