XETRA Launches Trading on Eight Currency ETNs from ETFS Foreign Exchange

For the first time, investors will get exposure with a leverage factor of five. The underlying ETNs’ pricing will depend

XETRA logoDeutsche Boerse AG (ETR:DB1) owned electronic trading platform, XETRA, has announced the launch of eight new currency exchange-traded notes (ETNs) issued by ETFS Foreign Exchange Limited and available for trading starting from today.

For the first time, the eight new currency ETNs will provide investors with exposure to a list of foreign exchange pairs with a leverage factor of five. The underlying ETNs’ pricing will depend on the moves in the exchange rates of the EUR/AUD, EUR/CHF, EUR/JPY and EUR/USD forex pairs.

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The new offering complements a previous batch of ETNs announced in July this year.

The addition of the EUR/CHF is particularly surprising, given that several brokers across the industry have implemented leverage hikes in order to stem risks associated with the Swiss National Bank’s effort to set an exchange rate floor of 1.20 Swiss francs per euro.

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Depending on the selection of an ETN, investors have the opportunity to go long or short on the euro or the corresponding counterpart currency. The total expense ratio on all ETNs is 1.88%.

Deutsche Börse’s product range in the ETF and ETP segment is currently composed by 1,038 ETFs, 223 ETCs and 149 ETNs.

According to a Bloomberg study, ETNs have grown substantially since inception. Holdings of ETNs shot up to over $22 billion as of December 2013. ETNs provide investors with a number of advantages, enabling them to make cost conscious investments in a new asset class, as well as further diversify their portfolios.

That said, the mentioned products are particularly risky as the level of leverage is very high for similar products.

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