Deutsche Borse has expanded its product range on Xetra, by allowing investors to invest in exchange traded notes (ETNs). ETNs are debt securities based on the performance of underlying reference indices. Unlike exchange traded commodities (ETCs), which have been tradable with Deutsche Borse since 2006, ETNs are based on indices outside the commodities sector.
The first two ETNs were issued by Barclays Capital under the brand name iPath. They track the volatility indices S&P 500 VIX short term futures index TR and S&P 500 VIX mid-term futures index TR and enable investors to participate in the development of the implied volatility of the S&P 500 index.
The S&P 500 index comprises the 500 major companies in the US, which are weighted in the index according to their market capitalization. The launch of iPath ETNs on Xetra marks the first time they have been tradable in Europe.
Additionally, parallel to the start of ETN trading on Xetra, Deutsche Borse is combining the ETC and ETN asset classes into the new product class exchange traded products (ETPs). Deutsche Borse’s ETF and ETP product range currently comprises 543 ETFs, 141 ETCs and 2 ETNs.
Rainer Riess, managing director of Xetra market development at Deutsche Borse, said: “We are happy to be able to offer investors another product innovation in cooperation with Barclays Capital. The new iPath ETNs enable investors to make cost-efficient investments in a new asset class as well as further diversify their portfolios.”
Uwe Becker, head of investor solutions in Europe at Barclays Capital, said: “The iPath VIX products demonstrate the characteristics which are vital for the success of any benchmark instrument. They are straightforward to understand, transparent and through our ETN platform, are easy to access for a broad range of investors to trade. They have removed the need for investors to trade volatility through variance swaps or futures.”
