Morgan Stanley signs up as new Authorised Participant for Boost ETP
Tuesday 18th June '13
BOOST ETP now has six APs, all of which are world class ETF Market Makers (MMs).
December 2012 saw BOOST list a platform of 3x short and 3x leverage ETCs / ETPs consisting of 10 ETPs and 10 Exchange Traded Commodities (ETCs) on the London Stock Exchange, the first of its kind in Europe.
The ETCs and ETPs are designed to return 3x the daily movement, long or short, of the relevant benchmark index. For example, if the FTSE index rises by 1% on a particular day, then “3UKL” will rise by 3% and “3UKS” will fall by 3%. However, if the FTSE index falls by 1% then “3UKL” will fall by 3% and “3UKS” will rise by 3% (less fees and adjustments).
Global Short and Leveraged ETF / ETP assets rose by $5.1bn (11.5%) in the first five months of 2013 to $49.3bn, as investors continue to increase their usage of Short and Leveraged (S&L) ETPs (source: Boost Global Short & Leveraged ETF/ETP Report, 31 May 2013). As a result of this increased usage and interest in S&L, BOOST is seeing an increase in investor interest, and as a result, an increase in APs and MMs wanting to join the Boost ETP platform.
According to BOOST’s report, globally exchange traded volumes have also increased for S&L ETPs, increasing from $113 bn to $154 bn per month since 31 Dec 2012 to 31 May 2013, representing a 36% increase.
BOOST ETP currently works with more than 17 MMs and investment banks. BOOST operates an open and competitive market making model which promotes deeper liquidity across its range of ETPs; this is in contrast to the single AP model adopted by many of BOOST’s competitors, which means investors in BOOST ETPs should benefit from greater liquidity and tighter pricing through an open model due to increased competition.
Hector McNeil, Co-CEO of BOOST ETP said:
“BOOST is very happy and excited to welcome Morgan Stanley to our platform of ETPs and ETCs. Morgan Stanley are a world class ETF market maker who will enhance the liquidity of Boost’s products.
“Continuing inflows into the Short and Leverage ETP market show that Short and Leverage ETPs are useful tools for investors, not least because they can be used to hedge portfolios or profit in falling markets. As equity indices hover around medium-term or all-time highs, we have seen an increase in investors wanting to go short the equity market.
“One of the main reasons we focused on 3x Short and 3x Leverage ETPs was because investors were telling us they wanted an efficient, robust and transparent way to trade short and leverage. BOOST ETPs are liquid, transparent, cost-effective and fully collateralised. In addition, BOOST provides a number of simple and comprehensive educational tools which allows investors to understand how Short and Leverage ETPs work and how they might be used in a portfolio.”