Tuesday, June 25, 2013
Now, Exante is marking another first in the world of bitcoin investing. They have opened up the Automatic Trading Platform (ATP) for their landmark Bitcoin Fund to allow share trading by investors, thus providing the capability to take long or short bitcoin positions depending on investment outlook.
The proprietary client that accesses the trading platform is quite robust with charting tools, portfolio management, and user-friendly order screens. A demo client is also available for Windows, Mac OS, and Linux and the company has an excellent customer support team.
Of course, one has to be an existing Exante customer with available equity to trade the Bitcoin Fund shares, however it’s not necessary to be an investor in the actual Bitcoin Fund itself. This presents a number of interesting possibilities, because commercial processors and large merchants of bitcoin now have a reliable method to hedge their bitcoin inventories without having to liquidate actual bitcoin on a daily basis. For instance, if a bitcoin merchant processor, such as BitPay, wanted to “lock in” a certain aggregate exchange rate for their merchants or for their own books, they could initiate a short position in the shares of the Bitcoin Fund without the need to sell bitcoin on the open market.
Also, it’s easy to see how investors in other Exante assets could speculate on the long side or short side for bitcoin without physical redemptions, similar to an ETF or contract for difference (CFD) instrument.
Although the data for the demo feed is delayed by 30 minutes and trading volume is still relatively light, the bid/ask spread sits at about 2.0% on average. Expect spreads to tighten up as volume increases. Given the range of other bitcoin margin trading and derivatives solutions in various jurisdictions, Exante seems to offer the most reliable platform for high-volume commercial traders with documented avenues for legal recourse should anything go wrong.
Setting the standard and constantly raising the bar, Exante is the king of bitcoin funds. The tradeable fund shares are distributed exclusively through the Exante Hedge Fund Marketplace platform. Authorized and regulated by the Malta Financial Services Authority, Exante offers the Bitcoin Fund with an initial minimum subscription of $100,000 and a 0.5% fee for subscriptions and redemptions (1 Bitcoin Fund share = 1 bitcoin).
The fund carries a 1.75% annual fee (payable in bitcoin to preserve the ratio) for managing the intricate security necessary to safeguard the bitcoin private keys. “Comparable fees are charged for other dedicated services which are designed to protect bitcoin holders against physical loss of the medium which holds their bitcoins,” according to Exante Partner Timothy Enneking.
Current assets under management in the Bitcoin Fund are $9.76 million (93,000 BTC) and there is no performance-based fee. The Exante Bitcoin Fund master wallet address is the second largest bitcoin address on the network as recently published by Bitcoin:Views. Their holdings represent nearly 1.0% of all bitcoins in existence.
With respect to Exante’s SEC-regulated feeder fund, BCF (US) is registered as a Delaware LLC with the general partner, Bitcoin GP, LLC, based in San Francisco, CA. Michael Bodnyk serves as the general partner representative, but the company has not registered any U.S. clients yet, claiming that U.S. securities law makes the fund open only to “qualified purchasers” with a minimum of $5.0 million in investment assets.
Aside from the Winklevoss brothers, that might be a little too rich for the average U.S. bitcoin bug.