In a Nov. 20th press release, Frankfurt-based MV Index Solutions announced the launch of its new Bitcoin index, MVBTCO. The company hopes to bring crypto trading to the next level by providing the first index based on US price feeds. Data will be collected from “three of the leading providers in OTC liquidity” — Genesis Trading, Circle Trade, and Cumberland. What is Bitcoin OTC trading?
Thomas Kettner, Managing Director at MV Index Solutions, remarked that MVIS is “excited to be the first provider to launch a bitcoin index based on the pricing feed of OTC trading desks. This enables clients who trade over the counter to use this index as a reliable benchmark for their trades or potential investment products.”
@MVISIndices partners with OTC trading titans @CumberlandSays @circlepay and @GenesisTrading to bring to market the first established #OTC #Bitcoin #Index. Ticker: #MVBTCO. Giant leap in #Bitcoin and #digitalassets market structure development! More info: https://t.co/LfMRTG1ndR pic.twitter.com/Ax7ktWk9iT
— Gabor Gurbacs (@gaborgurbacs) November 20, 2018
While most of the public focus goes to exchanges, OTC desks still account for most of the actual trading volume. Bitcoin and cryptocurrencies, in general, have not yet matured enough to have the liquidity to handle big trades. In an interview with Forbes, the director of fintech research at Tabb Group, Monica Summerville explains that “The big deals have to go OTC. A lot of the exchanges limit the order size, so you have to break up your orders, and that’s just fatal.”
The index is named MVIS Bitcoin US OTC Spot Index (MVBTCO) and is the 24th such to be incepted by MV Index Solutions, a subsidiary of the investment management firm VanEck. In an exclusive interview for The Block, Director of Digital Asset Strategy at VanEck/MVIS, Gabor Gurbacs said that “Transparency is coming to the over-the-counter market. Before this, no one would publish the price, and it happened behind the scenes.”
Earlier this year, VanEck requested to utilize pricing from OTC trading operations as the basis for its exchange-traded fund. Unfortunately, due to fraud concerns, the request was denied by the Securities and Exchange Commission. The company hopes that this new index, MVBTCO, will help alleviate some of the commission’s concerns about price manipulations by the over-the-counter organizations. According to Gabor, the three sources for MVBTCO’s price fall under the regulation of the Commodities Futures Trading Commission which is supposed to make manipulation challenging to achieve.
Gabor also made it clear that “VanEck continues to support market structure developments in the digital asset space. MVIS’ work with our core OTC partners, Cumberland, Circle Trade and Genesis Trading, is a major step forward towards greater transparency and price discovery in the institutional Bitcoin market. The index may pave the way for institutionally oriented products, such as ETFs as well as provide further tools to institutional investors to execute institutional size trades at transparent prices on the OTC markets.”
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