- The Small Exchange is launching a crypto futures product, according to a Bloomberg report.
- The new futures contract will track the performance of Grayscale trusts and crypto exposed companies.
- The firm hopes smaller contract sizes will attract retail investors to the futures market.
The Small Exchange, a retail-focused futures exchange startup backed by big Wall Street names, is launching a crypto futures product designed for small upfront cash commitments, according to a Bloomberg report.
The new product is a futures contract on the Small Cryptocurrency Index, which tracks the performance of Grayscale’s bitcoin and ethereum trusts as well as shares of crypto-exposed companies like Square and MicroStrategy.
The Small Exchange’s signature twist comes in unusually small contract sizes – 100 times the current price of roughly $30. Combined with margin, an investor might only have to post a few hundred dollars to initiate the trade.
The firm hopes smaller contract sizes will attract retail investors to the more obscure futures market, where the retail share of volume on the biggest futures market, the Chicago Mercantile Exchange, has for years languished under 5%.
“There’s been a reluctance from the vast community of active stock and derivatives traders to pick up crypto,” Frank Kaberna, Small Exchange’s chief content strategist, told Bloomberg, attributing this to existing products being too complex or requiring lots of upfront cash.
“[Our] crypto futures come in at one of the smallest notional sizes of any futures in the entire marketplace,” said Kaberna.
The Small Exchange, launched last year, has gotten backing from several Wall Street fixtures, including Citadel Securities, Interactive Brokers, and Jump Capital.