Bank of America / Merrill Lynch are Developing a Bitcoin Trading Product to Compete with Goldman Sachs and Morgan Stanley
The crypto gold rush is officially here for Wall Street’s biggest financial institutions. Earlier today, it was reported that Bank of America / Merrill Lynch is developing a bitcoin trading product similar to the products being built by Goldman Sachs and Morgan Stanley.
The ICO Journal was the first to report the news. That publication cites “a note that was passed to us in the late afternoon yesterday.”
The article features limited information about how the bitcoin trading product will work. However, we don’t know much about the bitcoin trading products being developed by Goldman Sachs and Morgan Stanley either, so that’s not unusual. We do know, however, that the major Wall Street institutions are developing bitcoin-related derivatives that will be traded on regulated marketplaces.
This is huge news for the crypto space, and it’s yet another sign of major Wall Street institutions jumping into bitcoin in a major way.
Here are the relevant details from The ICO Journal:
“Yes, Bank of America and Merrill Lynch is set to produce a Bitcoin product that will be tradeable for clients and based on the futures markets in aggregate. As Goldman Sachs and Morgan Stanley rush into the market, Bank of America seems to be having a ‘don’t forget about us’ moment and following the same roadmap.”
Specifically, Bank of America / Merrill Lynch is creating a bitcoin derivative connected to a non-deliverable forward, or NDF.
In traditional financial markets, NDFs are an outright forward or futures contract where counterparties settle the difference between the contracted NDF price or rate and the prevailing spot price or rate on an agreed notional amount. NDFs are used in various markets – including forex markets and commodities.
Citigroup and Morgan Stanley Are Also Developing Bitcoin Products
It’s been a big week for institutional involvement in bitcoin.
Goldman Sachs has been reportedly developing its bitcoin derivative product all year, and that news has been reported across the crypto industry all summer.
In the past week, however, it was revealed that Citigroup is also developing a similar product. Now, we have more good news as it’s been revealed that Bank of America / Merrill Lynch is following suit.
That means Citigroup, Goldman Sachs, Morgan Stanley, and Bank of America / Merrill Lynch will all soon be offering crypto products.
Sources online claim that Citigroup is trying to beat Goldman Sachs to the market by launching the first major bitcoin trading product among major Wall Street institutions.
Soon after the Citigroup news broke earlier this week, there were rumors of Morgan Stanley releasing their own bitcoin product. As reported earlier this week, Morgan Stanley plans to offer trading in complex derivatives tied to bitcoin.
Morgan Stanley plans to deal in contracts that give investors synthetic exposure to the performance of bitcoin. Investors will be able to go long or short using price return swaps, and Morgan Stanley will charge a spread for each transaction.
That report claims that Morgan Stanley “is already technically prepared to offer bitcoin swap trading.” The only thing they’re waiting for is “proven institutional client demand” after the competition of an internal review process.
Ultimately, 2018 could be the year the financialization of bitcoin officially got underway. It seems like we’re reporting on new Wall Street institutions launching bitcoin-related products every week. This latest report regarding Bank of America / Merrill Lynch suggests that Wall Street is officially jumping into the crypto industry, with some of the country’s largest financial institutions now launching bitcoin products.