Last Updated: 27 May 2021
Boost ETP has signed up three new exchange traded fund market makers to its range of products as it builds up its business.
The three new market makers are Flow Traders, ABN Amro and UBS. The three new signees join BNP Paribas as market makers and brings the total number linked by direct agreement to four.
The total number of market makers working with Boost ETP, however, is 15 with access through the BNP Paribas platform. This is different from the single authorised participant (market maker) model that ETP providers sometimes use.
Hector McNeil, co-Ceo of Boost ETP, told IndexUniverse.eu: “We started with BNP Paribas who were our swap provider and who are our first authorised participant. If we tried to get every market maker on our books before launch, we would never get the business off the ground. This is because of the vast amount of legal documentation involved.”
Boost ETP launched its first ETPs in December last year on the London Stock Exchange. The two newly listed ETPs were the 3UKL will provide long exposure equal to 3x the daily change of the FTSE 100 super leveraged RT TR Index, less fees and adjustments and the 3UKS, which will provide long exposure equal to 3x the daily change of the FTSE 100 Daily Ultra Short Strategy RT Gross TR Index, less fees and adjustments.
Demand has been good in the short time that the products have been on the market, McNeil said.
“At the moment we have $20 million in assets under management on our products. We are seeing most interest in our FTSE products and currently have roughly $8 million in our FTSE 3x leveraged ETP (long) and $6 million in the UK FTSE 3x inverse ETP. Given we launched in December, we are pleased with the AUM so far.”
The leveraged and inverse ETPs have not come without a spot of controversy though. The ETPs are listed securities, not funds, as Europe’s UCITS rules don’t allow funds to have leverage in excess of 200 percent.
However, McNeil has openly said that these products are designed for specialist advisers.
“These products should not be used in asset allocation portfolios. They are targeted at sophisticated investors who have a trading mentality. We have several layers of information before you can even get to the pages on these products on our site,” he said in a previous interview with iu.eu.
“We are seeing good demand for the ETPs and are talking to over 50 platforms, most of which are UK-based. In terms of market makers, we would like to end up with about 10 on our books,” concluded McNeil.