Citadel-Backed Exchange That Shook Up Treasuries Takes On Crypto
(Bloomberg) -- A Chicago-based exchange backed by some of the top names in trading has added cryptocurrency-related futures to its product list.
The Small Exchange, which counts Citadel Securities, Jump Capital, Interactive Brokers Group Inc. and Peak6 Investments among its investors, has already made its mark with smaller-sized contracts on stocks, Treasuries and precious metals. Now it has debuted a product designed to track the performance of the digital-asset industry: futures on the Small Cryptocurrency Index, which has 17 components that include Grayscale Bitcoin Trust, Coinbase Global Inc., Paypal Holdings Inc. and Square Inc.
“There’s been a reluctance from the vast community of active stock and derivatives traders to pick up crypto,” owing to a lack of accessible products (size, ease of use, and price transparency) and education in the space, said Frank Kaberna, Small Exchange’s chief content strategist. “Small Crypto futures come in at one of the smallest notional sizes of any futures in the entire marketplace, and it trades and settles to cash just like most standard equity index futures.”
The Small Exchange, which listed its first products in mid-2020, stands to benefit from the increasing participation of retail investors in markets. It’s not alone: Both CME Group Inc. and Cboe Global Markets Inc. have been issuing smaller-sized products in recent years themselves. At Small Exchange, volume grew more than 60% year over year since its launch last June, and it tallied its best daily volume on Sept. 14, Kaberna said.
SCCX traded at around $30.58 as of 10:15 a.m. in New York on Thursday, putting the contract size at $3,100, according to Small Exchange’s website.
“As the crypto market matures, many exchanges and brokerages have rushed to increase access to coins coming with great regulatory hurdles,” Kaberna said. “Amid this rush, they forgot one of the greatest maturation signs of a new class of financial products -- the establishment of its stock market.”
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