Exchange traded product (ETP) provider Boost has launched 10 three-times leveraged commodity ETPs on the London Stock Exchange, offering exposure to a raft of commodities.
The leveraged exchange traded commodities (ETC) track a range of front-month indices provided by Nasdaq, which are based on the Nasdaq Commodity Benchmark Index family.
The new range includes three-times long and inverse products on gold, oil, copper, silver and natural gas. The ETCs are designed to provide three times the daily movement – rather than any other time period - of the underlying benchmark.
For example, if the Nasdaq Commodity Crude Oil index rises by 1% on a particular day, then the 3OIL product will rise by 3% and 3OIS will fall by 3%.
Boost recently launched 10, three times leveraged equity ETPs, based on UK, Germany Europe and US country indices.
The issuer, established by Hector McNeil and Nik Bienkowski, has ambitious expansion plans, looking to list up to 100 different exchange traded products (ETPs) across all asset classes in the next two years, starting with a broad range of equities and commodities.
Boost said demand for leveraged and short products has increased over the last few years, as markets have trended sideways, resulting in volatile returns.
It will be fully collateralised to mitigate counterparty risk, using a mix of sovereign bonds and equities. Collateral will be delivered to Boost’s account held with an independent custodian, and will be available online daily.
However, unlike Ucits-regulated exchange traded funds (ETFs), these ETPs do not have to comply with the 10% counterparty exposure rule, although the Boost ETPs reduce exposure to the range of counterparties by fully collateralising.
Boost also claims its collateral system is unique as, depending on the credit rating of the firm’s counterparties, the mix of sovereign bonds held in the collateral will slowly increase. Furthermore, no cash or collateral will be delivered by Boost to a counterparty, unless Boost has received payment first.