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LONDON: Morgan Stanley plans to offer trading in complex derivatives tied to the largest cryptocurrency, according to a person familiar with the matter, joining other Wall Street firms in creating ways for clients to play the digital currency market.
The US bank will deal in contracts that give investors synthetic exposure to the performance of Bitcoin, said the person, who asked not to be identified because the information is private.
Investors will be able to go long or short using the so-called price return swaps, and Morgan Stanley will charge a spread for each transaction, the person said.
The bank is already technically prepared to offer the Bitcoin swap trading, and will launch once there is proven institutional client demand and after the completion of an internal approval process, the person said.
A spokesman for Morgan Stanley declined to comment on the initiative.
Wall Street’s biggest banks are pushing ahead with plans to offer sophisticated derivatives tied to digital assets, even as the market value for cryptocurrencies collapses beneath them.
Goldman Sachs and Citigroup are also preparing new products tied to Bitcoin, which has lost more than half its value this year.
Morgan Stanley does not plan to trade Bitcoin directly and its swaps are tied to Bitcoin futures contracts, the person said.
CEO James Gorman said earlier this year that the bank wouldn’t let customers buy and sell cryptocurrencies directly through Morgan Stanley, but would instead build a trading desk to support various derivatives tied to digital assets.
