TMX Group, Canada’s largest stock market operator, has announced plans to launch its first crypto futures product. The development by the company comes in response to the rising demand of such products by institutional investors who are seeking to offset the risks of trading in the relatively new asset class.
As reported by Reuters media outlets, John McKenzie, the Chief Executive Officer of TMX Group, said on Tuesday that the group plans to launch the cryptocurrency futures product on the Montreal Exchange this year.
“More institutional investors and traders hold more crypto-assets within their portfolios or for their clients than in ETFs. In crypto, there’s a lot of price volatility, so (they look at) how they manage this exposure,” McKenzie stated.
However, McKenzie mentioned that the firm has no current plans to make the product available to retail investors.
TMX’s efforts to unveil the crypto futures product come as a response to a wider increase in demand in cryptocurrencies from companies and investors. Wealthsimple, an online trading platform, has started providing crypto trading services to its customers. On Monday, KPMG based in Canada announced the addition of Bitcoin and Ethereum to its corporate treasury. The popular audit and tax firm said: “crypto coins as a ‘maturing asset class’, which investors are increasingly seeking to gain exposure to”, are expected to become “a regular part of the asset mix.”
Last year, TMX, the operator of the Toronto Stock Exchange and Montreal derivatives exchanges, listed the world’s first Bitcoin ETF. However, in the recent months, crypto assets have witnessed drastic decline in their values as investors flee risks associated with their volatility amid expectations that central banks are preparing to hike interest rates. So far most digital assets have not recovered their losses in recent weeks.
Investors Going for Bitcoin Futures
Last year marked a significant milestone for cryptocurrency as investors began trading the first U.S. Bitcoin futures exchange-traded funds. The announcement showed the world that cryptocurrencies are a mature asset class just like any other traditional investment products. In October 2021, crypto hit the New York Stock Exchange with the introduction of a new Bitcoin-linked fund. Such funds invest in Bitcoin futures contracts to sell or purchase the asset later for an agreed-upon price, rather than Bitcoin directly. The new products allow investors to trade through regular investment accounts, and therefore bypasses the hassle and security concerns of crypto exchanges.
