MOEX to offer futures tracking the value of Ethereum

Russia’s largest stock market, the Moscow Exchange, will soon offer futures contracts tracking the price of Ethereum, the biggest cryptocurrency by market cap after Bitcoin.

The platform said it will also present futures on U.S. treasury bonds – a first in the Russian Federation, where the growing yield of American government securities has caught the attention of investors.

Russians to start trading futures on ETH

The Moscow Exchange (MOEX) plans to launch two new futures contracts in August, one of which will be tied to the value of the second most popular cryptocurrency, while the other will track the market dynamics of U.S. government securities.

The exchange intends to begin trading a futures contract on an exchange-traded fund (ETF) that invests in Ethereum (ETH), Maria Patrikeeva, managing director of its derivatives market, told RBC during an investment forum, organized by the Russian business news outlet.

Speaking on the sidelines of the Invest Weekend event, Patrikeeva elaborated:

“The underlying asset will be an ETF for the largest fund from BlackRock, the iShares Ethereum Trust ETF, which invests in Ethereum. Its quote will be equal to the cost of one share of the fund, the contract size will be slightly less than IBIT.”

The announcement of the ETF-based product comes after, in early June, MOEX started trading Bitcoin futures, following the Central Bank of Russia’s decision to allow the offering of crypto derivatives to qualified investors in the country.

Besides MOEX, a number of other major players in the Russian financial market have also launched crypto-linked instruments, including Russia’s largest bank by assets, the state-controlled Sber, and the leading Russian broker Finam.

The contracts, the first batch of which expires in September, are on the shares of BlackRock’s iShares Bitcoin Trust ETF (IBIT), which tracks the price of Bitcoin (BTC), the leading cryptocurrency by market capitalization. MOEX also prepares to offer a futures contract based on its own Bitcoin index.

BTC recently reached a historic high, exceeding $123,000 per coin on Monday, although it has since dropped below $120,000. Late on July 14, the IBIT futures were trading at around $70 per contract while one share of its underlying asset, the IBIT fund, was under $76 on the NASDAQ exchange, RBC noted.

By June 27, the open net positions of retail investors in Bitcoin futures on the Moscow Exchange reached 1.25 billion rubles (over $16 million), Russia’s monetary authority revealed in its latest “Overview of Financial Market Risks” report for last month.

Russian investors to speculate on U.S. debt

The other instrument that the Moscow Exchange will offer next month will be based on an ETF investing in long-term U.S. Treasury bonds – the iShares 20+ Year Treasury Bond ETF. The MOEX contract will be based on the value of one share of this fund.

The average maturity of the bonds in the ETF portfolio is nearly 26 years, and the effective duration of the government securities is 15.7 years, Maria Patrikeeva detailed.

The yield on long-term U.S. Treasury bonds has grown significantly, to almost 5%, since President Donald Trump announced he’s going to raise import duties, RBC remarked. It also highlighted that this will be the first futures contract on the Moscow Exchange that tracks the dynamics of U.S. debt securities.

MOEX is already providing Russian investors with access to about a dozen contracts with underlying assets in the form of shares of funds based on S&P 500, NASDAQ, and Dow Jones, as well as indexes of European and Asian stock markets.

As part of a plan to expand the geography of its derivative offerings, the Russian exchange announced earlier that it will launch two futures contracts on shares traded on the Hong Kong Stock Exchange, those of Chinese tech giants Tencent and Xiaomi.