The New York Stock Exchange (NYSE) has launched Bitcoin Index, the first exchange-calculated and disseminated bitcoin index. Launched on May 21, the index will represent the US dollar value of one bitcoin unit based on transactions occurring on select bitcoin exchanges which have been evaluated and meet the exchange’s quality standards.
Bitcoin values are quickly becoming a data point that investors want to follow as they consider transacting, trading or investing with this emerging asset class, said Thomas Farley, president of the NYSE Group in a statement. The exchange has plans to launch complementary products, said Farley.
The index uses a rules-based methodology to analyse a dataset of matched transactions and verify the integrity of the data to ultimately produce an objective and fair daily value for one bitcoin in US Dollars. The benchmark will initially feature data from transactions from Coinbase Exchange, a US-based bitcoin exchange and wallet and trading platform with over 2.8m consumer wallets, 39,000 merchants and 7,000 developers.
NYSE’s index committee will oversee the rules and methodology behind the benchmark, to ensure it continuously reflects the current nature of the evolving bitcoin market. The committee will also identify and review the data sources for the index calculation process as further exchanges that meet NYSE’s rigorous standards for transparency, liquidity and governance are identified. The suite of indices is anticipated to increase in number.
NYSE indices have a notable presence in the global structured products market with more than 5,000 products featuring NYSE benchmarks of which 2,490 are still live products. The most popular NYSE benchmark is the NYSE Arca Gold Bugs (AMEX Gold Bugs) which features on 2,045 products, followed by the NYSE Arca Biotechnology which is linked to 237 products, and the NYSE Arca Oil Index (AMEX Oil) which is linked to 111 products.
The launch of the first Bitcoin index by NYSE follows Nasdaq Stockholm’s listing of the Bitcoin Tracker One, the first ever tracker certificate using the digital currency as the underlying asset. The Bitcoin Tracker One was issued by XBT Provider, part of the KNC Group.
The introduction of the Bitcoin Tracker One should help inform institutional and retail investors seeking investment exposure related to bitcoin through index-linked listed products, said Adam Kostyál, senior vice-president and head of European listings at Nasdaq in a statement.
The Bitcoin Tracker One will be traded in Swedish Krone (SEK) with Mangold as dedicated market maker. Mangold is an active independent provider of structured products in Sweden with more than 320 products launched since 2009 of which 208 are still live products. In 2014, Mangold sold over SEK600m (€63.9m) in 2014 across 70 products mainly via structured certificates (136 products) and structured notes (127). Year to date, the Swedish firm has marketed 18 products and raised SEK261m (€27.8m) in sales.
The SEC’s Office of Investor Education and Advocacy issued an Investor Alert earlier this month to make investors aware about the potential risks of investments involving Bitcoin and other forms of virtual currency.