NYSE seeks SEC permission to list five bitcoin-related ETFs
08 Jan 2018
The New York Stock Exchange has asked the Securities and Exchange Commission for permission to list five bitcoin-related exchange-traded funds (ETFs).
The funds were created by Direxion Asset Management to track bitcoin futures trading and while they are not tied to the price of bitcoin itself, the funds would multiply investor returns when compared to the underlying market, the filing said.
The instruments, named 1.25X Bull Fund, 1.5X Bull Fund, and 2X Bull Fund, will leverage "investment results (before fees and expenses) that correlate positively to either 125 per cent, 150 pert cent, or 200 per cent the daily return of the target benchmark," the filing said.
This would mean for each of the funds, a 1 per cent rise in the price of bitcoin futures should result in a per-share gain of between 1.25 per cent and 2 per cent, on the basis of the Bull Fund used. However, the potential for higher rewards carries with it higher risk: if the price of bitcoin falls, investors' losses would be multiplied by 1.25.
According to the filing, the funds, as such are not intended for long-term investing. The ETF filings are among several filings related to the bitcoin market by the NYSE.
Approval of the request by SEC would see five ETFs listed on Arca, a secondary marketplace on the NYSE. Business Insider and Reuters were first to report the development.
"The 1.25X Bull Fund, 1.5X Bull Fund, and 2X Bull Fund ... seeks daily leveraged investment results (before fees and expenses) that correlate positively to either 125 per cent, 150 per cent, or 200 per cent the daily return of the target benchmark," the filing said.
The inverse ETFs, on the other hand, or so-called "bear funds," provide a way for investors to profit on declining bitcoin futures offering returns that "correlate to two times the inverse (-200 per cent) of the daily return of the target benchmark."
