Investor interest in centrally cleared, exchange-traded financial products continues as leading German financial trading venue, Deutsche Borse, has announced that it has extended its Exchange Traded Products (ETP) range. The Frankfurt-based trading venue has issued five new Exchange Traded Notes (ETN), the listed instruments will offer investors access to foreign currency markets via currency baskets. The new product launch comes as the exchange’s core trading platform, Xetra, strengthens its position in the European ETN market.
The new ETNs were issued from the ETF Securities product range and were listed on the exchange’s trading platform on Monday the 14th of July. The new issuance allows investors to connect to liquid FX markets, the five ETNs track the performance of four tactical and one strategic currency basket.
Deutsche Borse, the trading venue that operates the Xetra trading platform, first launched ETNs in 2006. ETNs are defined as financial instruments or debt securities that are based on the performance of underlying reference indices. They differ to other ETPs, e.g Exchange Traded Funds (ETF) or Exchange Traded Commodities (ETC) that are index or asset class-based.
ETNs have grown substantially since inception, a recent Bloomberg survey in December 2013 stated that holdings of ETNs have shot up to over $22 billion. ETNs provide investors with a number of advantages, they enable them to make cost conscious investments in a new asset class as well as further diversify their portfolios.
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The exchange outlined details regarding the new notes, in the press statement;
The first tactical currency basket offered as either long or short, is a Morgan Stanley index which tracks the performance of the euro against G10 currencies. The second tactical currency basket, which is also offered as long or short, is a Morgan Stanley index which tracks the performance of currencies whose countries heavily depend on the export of commodities. The basket contains the Australian dollar, New Zealand dollar, Norwegian krone and the Canadian dollar. These four currencies are generally known as commodity currencies.
In addition, the ETNs covered one strategic basket, the strategic currency basket is based on four separate strategy components that track different investment themes within the currency sector. This is also a Morgan Stanley index which identifies and realises yield opportunities for G10 currencies against the US dollar.
Deutsche Börse’s Xetra trading platform is the largest for ETPs in the Eurozone area, the exchange places the asset classes ETCs and ETNs in the product class ETPs. The new instruments take the exchange’s portfolio to 135 ETNs, accompanying its vast range of ETFs at 1040 and ETCs at 225.