Swissquote Group, Switzerland’s leading provider of online trading services, has expanded its crypto offering with an actively managed multi-cryptocurrency certificate, powered by its machine learning algorithm. The exchange-traded product is listed on Switzerland’s largest stock exchange, the Six Swiss Exchange.
Swissquote’s offering removes one of the barriers to the introduction of a cryptocurrency ETP to institutional investors as the new investment vehicle allows them to buy into the market without directly investing in the virtual asset class, which regulations prohibit them from doing.
The objective of the ‘Multi-Crypto Active Index’ certificate is to achieve capital growth by using an actively managed approach that shifts holdings between cash and four different cryptocurrencies. The portfolio consists of the four cryptocurrencies with the highest trading volume and highest market capitalization: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
The investment dimensions of Swissquote’s algorithm are over or underweighting each cryptocurrency position depending on the predicted future direction. The company said that the minimum share of each of the four cryptocurrencies is 10%, so the maximum weight of a single cryptocurrency within the portfolio can go up to 70%.
The product trades under the symbol SQCRTQ, with four cryptocurrencies priced in USD as the underlying asset. The certificate has a three-year term. The first day of trading is on March 14, 2018, and the last day of trading will be on March 8, 2021. Between those dates, investors will be able to trade the Swissquote certificate on the secondary market, i.e. buy or sell at the applicable bid/offer prices.
Swissquote is employing its accumulated ‘digital’ experience. Just a few months after launching Bitcoin trading on its platform, the company designed a unique algorithm-driven systematic approach to appeal particularly to investors who require exposure to the digital asset without necessarily wanting to be fully exposed to the risks associated such as hacking attacks or management of access keys.
The risks have been demonstrated in the recent past as many crypto wallets and exchanges have been hacked, and customer data has been compromised.
Commenting on the news, Peter Rosenstreich, Head of Market Strategy at Swissquote, said: “It is the next evolutionary step in our strategy of opening up the cryptocurrency market to the mainstream investor by creating investment opportunities that reduce volatility while offering the transparency that comes with the listing at the Swiss Exchange. This new portfolio is designed for investors who recognize the potential of cryptocurrencies but rather than taking the risk of investing in a single one, look for a structured product that is easy to trade and actively managed.”