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BOOST Lists Eight European & US Equities 3x Long and 3x Short ETPs on the LSE

Thursday 13th December '12

BOOST ETP (BOOST), the independent exchange traded product (ETP) provider, announces today that it has listed eight new ETPs on the London Stock Exchange (LSE). This brings BOOST's product lineup to ten ETPs, providing 3x leveraged and 3x short exposure to the markets that European investors follow the most: Europe, UK, Germany and the US.

BOOST's new ETPs track a range of indices provided by world class index providers: NASDAQ, Russell, EURO STOXX® and DAX®.

The new ETPs listed today are:

Product Name LSE Code
Boost LevDAX® 3x Daily ETP 3DEL
Boost ShortDAX® 3x Daily ETP 3DES
Boost EURO STOXX® 50 3x Leverage Daily ETP 3EUL
Boost EURO STOXX® 50 3x Short Daily ETP 3EUS
Boost NASDAQ 100® 3x Leverage Daily ETP QQQ3
Boost NASDAQ 100® 3x Short Daily ETP QQQS
Boost Russell 1000® 3x Leverage Daily ETP 3USL
Boost Russell 1000® 3x Short Daily ETP 3USS

The eight ETPs are designed to return 3x the daily movement, long or short, of the relevant benchmark index. For example, if the DAX rises by 1% on a particular day, then "3DEL" will rise by 3% and "3DES" will fall by 3%. However, if the DAX falls by 1% then "3DEL" will fall by 3% and "3DES" will rise by 3% (less fees and adjustments).

The listing of the eight new 3x leveraged and 3x short ETPs follows close on the heels of BOOST listing its first two ETPs on 6 December 2012 which track the FTSE100: "3UKL" and "3UKS". Assets Under Management (AUM) in "3UKL" and "3UKS" currently stand at approximately $10 million1.

Demand for transparent leveraged and short products has increased over the past few years with global leveraged and short ETP assets rising to $43bn2, as many financial markets have trended sideways, resulting in volatile but poor long term returns. Leveraged and short ETPs make it possible to take advantage of this short term volatility in world financial markets.

Co-CEO, Nik Bienkowski comments:
"We are very excited at being able to offer a strong initial product offering. The new ETPs bring BOOST's offering to a total of ten 3x leveraged and 3x short ETPs within the first week. The new ETPs provide access to some of the most liquid and widely followed European and US equity market benchmarks. BOOST's goal is to provide a comprehensive platform, allowing investors to take advantage of a wide variety of trading and hedging opportunities as they occur, by using an ETP."

To highlight the potential opportunities now available as a result of short and/or leveraged ETPs, the average daily change in the DAX Index, was 1.20% per day, over the past five years (to 30 November 2012). By comparison, a buy and hold investment in the same DAX index over the same 5 year period was -5.1% (before fees), equating to -1.21% p.a.. The table below shows that the daily absolute change in each index was quite similar, at approximately 1.10% to 1.27% per day.3

Index4 Average daily change (absolute change)
DAX® 1.20%
EURO STOXX® 50 EUR Net Return 1.27%
Russell 1000® Net 30% Total Return USD 1.10%
NASDAQ-100® Notional Net Return Index 1.15%

BOOST specialises in providing sophisticated investors with leveraged and short ETPs which gives investors instant exposure to highly liquid underlying markets in one single trade. Investors can now get simple exposure to leveraged returns without having to borrow the additional funds to gain the additional long exposure, or the need to borrow the underlying shares and then sell those shares in order to short the market. BOOST will be providing significant educational support to the investment community with the aim of ensuring investors can maximise their usage of the products.

The new ETPs will help expand the investment horizons of investors and will allow them to execute a wide variety of strategies which will include:

  • leverage the daily returns of an investment for the same capital as a non-leveraged trade
  • hedge existing positions in one simple trade
  • use a long or short strategy to take advantage of any short term rises or falls in the market, especially in a sideways trending market
  • use in pairs to trade and take advantage of undervalued assets
  • get short the market efficiently and cheaply without having to arrange and finance complex stock borrowing positions

Similar to Exchange Traded Funds (ETFs), BOOST ETPs are liquid, accessible and simple. BOOST ETPs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying markets tracked, and can be traded by investors on a regulated Exchange in the same way as any equity. BOOST ETPs will provide accurate and transparent leveraged and short exposure to recognised benchmarks in a single trade. In addition, BOOST leveraged and short ETPs require no borrowing of stock or funds to gain the relevant exposure. BOOST ETPs are simply priced off transparent indices published by world class index providers.

Getco Europe Ltd will act as the official market maker for the existing two FTSE 100 ETPs and the eight new ETPs. Getco is a world class electronic market maker and will provide significant liquidity to the Boost ETP platform. Getco has entered into a liquidity agreement with the Exchange to provide competitive pricing throughout the trading day.

BOOST ETPs will be backed by a robust risk management system where (i) depending on the credit rating of BOOST's counterparties, the mix of sovereign bonds held in the posted collateral will slowly increase, and (ii) no cash or collateral will be delivered by BOOST to a counterparty unless BOOST has received payment first.

1 Correct as of 12 December 2012
2 Source: Bloomberg, BOOST ETP LLP
3 Sources for this paragraph are: DAX®, Bloomberg and BOOST ETP LLP. Returns are shown in the local index currency, being EUR or USD for the relevant index
4 Sources from this table are: DAX®, NASDAQ, STOXX, Russell, Bloomberg and Boost ETP LLP