DBS Bank to Launch OTC Crypto Options Trading and Structured Notes for Institutional Clients

DBS Bank has announced that it will launch over-the-counter (OTC) cryptocurrency options trading and structured notes for its institutional clients and accredited wealth clients starting in the fourth quarter of 2024.

The Singapore-based bank disclosed today that the new offerings will involve financial products linked to the price of Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization.

The bank stated that eligible clients who wish to gain exposure to these digital assets can do so through options trading and structured notes. According to DBS, these products will allow clients to manage the volatility associated with cryptocurrency prices. Jacky Tai, Group Head of Trading and Structuring at DBS, mentioned, “Professional investors are increasingly allocating to digital assets in their portfolios. Underpinned by DBS’ strong credit ratings and longstanding expertise in structuring solutions, these financial products expand the bank’s value proposition to provide clients trusted institutional-grade access to the digital asset ecosystem.”

DBS Bank explained that its crypto options contracts derive value from underlying cryptocurrencies such as Bitcoin and Ethereum prices. These options contracts will allow clients to hedge against price volatility by enabling them to buy or sell digital assets at a predetermined price and date. The bank pointed out that clients who store their Bitcoin and Ethereum holdings with DBS could hedge their positions using different options structures.

An example scenario involves a client seeking to manage Bitcoin’s fluctuation by acquiring a put option. This option grants them the authority to sell Bitcoin at a predetermined price on a specified future date, regardless of whether the market value falls below that threshold. “Clients may earn yield on fiat or take delivery of the underlying cryptocurrency, depending on the product’s structure and cryptocurrency price movements,” DBS noted.

DBS Bank also introduced structured notes as part of its new offerings. A structured note is a type of debt security issued by financial institutions, with returns based on the performance of underlying assets, such as cryptocurrencies. The bank stated that eligible clients could potentially earn yields through these notes or take delivery of the underlying digital assets, depending on the specific structure of the product.

Currently, clients of DBS build their digital asset portfolios by trading cryptocurrencies and security tokens through the DBS Digital Exchange (DDEx). According to DBS, the addition of crypto options and structured notes will provide an alternative channel for clients to build exposure to digital assets. The bank emphasized that these products will only be available to eligible institutional clients and accredited clients of DBS Private Bank and DBS Treasures Private Client.

DBS Bank’s involvement in the digital asset space has seen considerable growth, as indicated by DDEx showing a nearly threefold increase in the value of digital assets traded in Singapore dollar values over the first five months of 2024 compared to the equivalent duration in 2023. Jacky Tai highlighted that the bank’s offerings are designed to meet the needs of clients seeking “safe-haven bank-grade platforms to custodize and trade digital assets.”

Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

Post Views: 144