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ETP - Exchange Traded Product


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Hello Everyone,

The purpose of this post is to introduce an asset class sometime unknown by investors, ETPs (Exchange Traded Product).

ETPs allow you to trade stocks, indices, currencies, commodities and even cryptocurrencies … in a regulated environment, with products that are available directly from a sharedealing account (like IG ShareDealing). Most of the time with a low minimum amount.

The term ETP actually includes ETFs (which you may know), ETCs (Exchange Traded Commmodities / Currency) and ETNs (Exchange Traded Note).

It can allow leverage or short position but not only, you can find Delta one ETP as well!

I will be happy to answer your questions regarding this type of product.
I will not mention any issuer or specific product here, only answering generic questions. 

Edited by Marcraffard
correction
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ETN - Access to Less Explored Markets and Assets

ETN investors are able to access the markets and broad asset classes that are out of their reach. It creates immense possibilities for them to make profits from volatility and liquidity.

With IG, you can access these product via the ShareDealing Account.

or most of the time, they are available as CFD with IG :) 

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22 hours ago, Marcraffard said:

I will be happy to answer your questions regarding this type of product.
I will not mention any issuer or specific product here, only answering generic questions. 

Hi, I saw this article recently on crypto ETPs, as the FCA has banned leveraged crypto trading in the UK recently might this be an option for crypto traders in the UK in the future and your views as to suitability to trade if so? 

Europe’s Largest Crypto Asset Manager Launches Bitcoin ETP on SIX | Finance Magnates

 

.

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Hi Caseynotes,

The FCA did not ban only leveraged crypto trading like CFD, Option and Futures... but all derivaties, including ETP/ETN. FCA bans the sale of crypto-derivatives to retail consumers.

https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers

This ban is applicable only to retail investors, so the only way I saw for UK investors to have access to it => being professional investors.

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On 19/01/2021 at 13:45, Marcraffard said:

Hello Everyone,

The purpose of this post is to introduce an asset class sometime unknown by investors, ETPs (Exchange Traded Product).

ETPs allow you to trade stocks, indices, currencies, commodities and even cryptocurrencies … in a regulated environment, with products that are available directly from a sharedealing account (like IG ShareDealing). Most of the time with a low minimum amount.

The term ETP actually includes ETFs (which you may know), ETCs (Exchange Traded Commmodities / Currency) and ETNs (Exchange Traded Note).

It can allow leverage or short position but not only, you can find Delta one ETP as well!

I will be happy to answer your questions regarding this type of product.
I will not mention any issuer or specific product here, only answering generic questions. 

Hi

I've traded ETF's and ETC's since the early 2000's - Biggest bug bear was quickly finding those products priced in GBP and not USD

My charting software has solved this issue

Maybe a good post would be to explain the pro's and con's for Leveraged products - holding for long and short term etc and Delta one too

 

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Hi THT,

Thank you very much for your message. I think you can find now some products priced in GBP and listed on the LSE.

I will take some time to make a longer pro/con comparison regarding Leveraged and Short ETP, but in a nutshell, pro= you cannot lose more than the money you put in it.. con= if you hold it for more than one day the compounding effect can change a lot your performance.

 

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On 19/01/2021 at 13:45, Marcraffard said:

Hello Everyone,

The purpose of this post is to introduce an asset class sometime unknown by investors, ETPs (Exchange Traded Product)....

Hi, thank you for bringing the topic , I personally didn't know about this type of asset class.

I googled a bit and found the basics about ETPs. They seem to be very interesting but also oriented to professionals as some of them might not be regulated by the FCA as per link below:

https://www.fca.org.uk/consumers/exchange-traded-products

Could you recommend any book on the subject that we could read?

Also is there any list of pros and cons against the usual share dealing, CFDs and Spread Betting accounts that we could point to?

 

Edited by jlz
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51 minutes ago, jlz said:

Hi, thank you for bringing the topic , I personally didn't know about this type of asset class.

I googled a bit and found the basics about ETPs. They seem to be very interesting but also oriented to professionals as some of them might not be regulated by the FCA as per link below:

https://www.fca.org.uk/consumers/exchange-traded-products

Could you recommend any book on the subject that we could read?

Also is there any list of pros and cons against the usual share dealing, CFDs and Spread Betting accounts that we could point to?

 

Hi JLZ

You need to investigate the company issuing the said ETP's - There's lots of different ones out there, some buy real assets, so use "synthetic" tracking etc  - they are 100% legit but you have to be certain they won't go bust 

Key considerations as you are investing real money into the ETP are:

  • Is the ETP safe in terms of going bust
  • Is you ISA/SIPP/DEALING account provider safe

I've traded these products for decades - as long as the ETP provider does not go bust then normal investing/trading risks apply - I've just literally this afternoon taken profits on a Nasdaq100 ETF

They came on the scene in the late 90's in the UK and you could track markets not offered by funds at that point - I was in a china ETF in 2000 provided by ishares within my sipp/isa account and was a cheap way of tracking the Chinese market as you didn't have the 5% bid/offer spread and 1% AMC

You buy them exactly as you would say BP - If BP goes belly up overnight you're cash is trapped, same would apply here, but as I say if the company is liquid and sound then normal risks apply

 

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Guest Tihomir

Thanks for bringing this topic. It's a very interesting asset class, in my view. 

ETP investment products lead to multiple opportunities to unlock alpha. Can be used for tactical allocation based on the market volatility, swing trading or event driven strategies. However, those products are suitable for investors that fully understand the risks embedded. 

End of last year invested in GraniteShares 3x Long Tesla Daily ETP, pretty happy with the performance. 

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Thanks for the post. 

I would be interested in understand the costs associated with the relevant ETF.

Do they carry the same sort of fees as one would expect from investing in the fund directly (management, performance, early exit etc.) or are they limited to the usual dealing costs - commission, SDRT?

Also, for my clarity, we are talking about fund which may be issued by large investment managers (e.g. Blackrock - iShares, Baillie Gifford, PIMCO etc.) which are traded on the LSE

  • Like 1
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On 20/01/2021 at 12:26, Marcraffard said:

Hi Caseynotes,

The FCA did not ban only leveraged crypto trading like CFD, Option and Futures... but all derivaties, including ETP/ETN. FCA bans the sale of crypto-derivatives to retail consumers.

https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers

This ban is applicable only to retail investors, so the only way I saw for UK investors to have access to it => being professional investors.

Hi @Marcraffard, thanks for the reply, thought that might be the case, thanks for the info.

  • Like 1
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23 hours ago, TFFX_ said:

Thanks for the post. 

I would be interested in understand the costs associated with the relevant ETF.

Do they carry the same sort of fees as one would expect from investing in the fund directly (management, performance, early exit etc.) or are they limited to the usual dealing costs - commission, SDRT?

Also, for my clarity, we are talking about fund which may be issued by large investment managers (e.g. Blackrock - iShares, Baillie Gifford, PIMCO etc.) which are traded on the LSE

Hi TFFX,

About the cost/fee to trade ETP (excluding brokerage fee/commission), it is variable and it depend of each product.

Like ETFs, there is no performance/entry/exit fee. The fee is included on the tprice.

Fees will be higher on ETP with underlying asset like crypto or small cap.

Leveraged and Short ETP will maybe higher too but insignificant since these are products designed for the very short term. i.e. 3LAL which is 3x Long Alphabet Daily ETP have a Total Daily Ongoing Cost of 0.0049%

In any case, you must check all cost on the KID that must be provided by the issuer.

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Announcement - GraniteShares 3x Short Tesla ETP

Dear IG traders,

GraniteShares would like to inform you about our decision to consolidate the GraniteShares 3x Short Tesla ETP (3STS). For every 1,500 ETPs owned, investors will receive 1 new ETP in exchange.

Investors already invested in 3STS will own fewer ETPs than before the consolidation but the Value per ETP will be proportionally higher. As a result, there will be no impact on the value of your investment. If the consolidation results in any fractional securities, they will automatically be redeemed in cash.

The record date for the consolidation will be on 14th May 2021 with the consolidation date effective on 17th May 2021. Proceeds linked to fractional ETPs are expected to be transferred to the clearing systems on 19 May 2021. Please note it may take a few days for the payment to be received.

GraniteShares believes it is in the investors’ interest to keep ETP prices within efficient trading ranges, and to try and avoid situations where ETP prices become too low or too high.

GraniteShares will not charge any commissions or fees related to the consolidation of securities or disbursement of the payments if fractional securities are involved.

Please refer to the following link for more information: https://graniteshares.com/institutional/uk/en-uk/research/3sts-reverse-split-effective-17-may-2021/

In case of any additional questions, please let us know.

Edited by Marcraffard
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