Morgan Stanley ready to offer trading of complex derivatives tied to Bitcoin

  • September 13, 2018
  • 2:57 pm ET
Morgan Stanley

Image via @MorganStanley

Morgan Stanley is preparing to offer institutional clients swaps that are tied to Bitcoin futures contracts, allowing them to take a “synthetic position” in Bitcoin.

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While they won’t be able to trade Bitcoin directly, Bloomberg reports that Morgan Stanley is preparing to offer institutional clients swaps that are tied to Bitcoin futures contracts.

This arrangement will allow those clients to trade complex derivatives and effectively take a “synthetic position” that will mirror Bitcoin’s performance.

“A synthetic position is a way to create the payoff of a financial instrument using other financial instruments [and] can be created by buying or selling the underlying financial instruments and/or derivatives.”

Investors can go long or short with “price return swaps,” and Morgan Stanley stands to win whether the price of Bitcoin goes up or down, as they plan to charge a spread on each transaction.

The technology behind the new offering is reportedly ready already, but the firm intends to hold off on going live until there’s sufficient demand from the institutional clients for whom it’s intended.


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