Toronto: Canada’s largest stock market operator, TMX Group, plans to launch its first cryptocurrency futures product in response to institutional investors’ desire to offset the risks of trading in the relatively new asset class, the company’s chief executive told Reuters on Tuesday.
The group, which had 17 cryptocurrency exchange-traded funds (ETFs) listed on the Toronto Stock Exchange as of Dec. 31, aims to release the product on the Montreal Exchange this year, John McKenzie said in an interview after TMX posted fourth-quarter results on Monday.
“More institutional investors and dealers are… holding more crypto assets within their portfolios or for their clients or in ETFs,” he said. “In crypto there’s a lot of price volatility so (they’re looking at) how they manage that exposure.”
TMX, the operator of the Toronto stock and Montreal derivatives exchanges, listed the world’s first bitcoin ETF almost a year ago.
Cryptocurrency assets have posted steep declines in recent months as investors fled risk assets amid expectations of interest rate increases by central banks. They have recovered some of those losses in recent weeks.
TMX is responding to a broader increase in interest in cryptocurrencies from investors and firms. On Monday, KPMG in Canada added Bitcoin and Ethereum to its corporate treasury, calling cryptocurrencies a “maturing asset class that investors are increasingly gaining exposure to” and said it expects them to become “a regular part of the asset mix.”
Online trading platform Wealthsimple, which currently offers trading of cryptocurrencies, told Reuters it aims to eventually enable their real-world use.
TMX is not modeling the futures product on any other offering, but existing regulations around futures products should cover it, McKenzie said, adding the company has no current plans to make it available to retail investors.
TMX Group reported fourth-quarter adjusted earnings of C$1.77 per share from C$1.43 a year ago and increased its quarterly dividend 8% to 83 Canadian cents.
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