The offering will allow clients to hedge their positions in Bitcoin and Ether using various forms of options.
DBS Bank will commence OTC Crypto Options prices live trading for Institutional Customers
DBS Bank of Singapore has announced plans to offer over-the-counter (OTC) crypto options trading and structured notes to its institutional clients.
In a press release on Tuesday, the company said it will provide institutional investors with more sophisticated tools to study major cryptocurrencies such as Bitcoin and Ether, the two largest digital assets in terms of market cap.
“It is the first bank with Asian headquarters to offer financial products whose value correlates with the price of Bitcoin and Ethereum,” the statement said.
Investors will get access to crypto options in Q4
Starting in the fourth quarter of 2024, institutional clients seeking exposure to the crypto market will have the opportunity to invest in structured options and notes trading.
Crypto options trading involves contracts that derive their value from the underlying price of the cryptocurrency, allowing investors to hedge against the potential volatility of the digital asset.
With these contracts, sellers can agree to buy or sell goods at a predetermined price in the future.
At the same time, structured notes are debt securities issued by financial institutions whose returns are linked to the performance of underlying assets such as cryptocurrencies.
The DBS Bank offering will allow clients to hedge their positions in Bitcoin and Ether using a variety of option structures.
For example, investors can buy a put option that allows them to sell bitcoin at a predetermined price at a future date, even if market prices fall below that threshold, thereby protecting against potential losses available.
“Professional investors are constantly expanding their portfolios to include digital assets,” said Jackie Tay, head of trading and scheduling at DBS Group in a commentary.
“This new service gives them an additional stage to build exposure and optimize their portfolio management strategies.”
DBS Expands Crypto Offerings
The bank’s move to OTC crypto options trading is part of its broader strategy to expand digital asset services.
DBS is actively leveraging Web3 technology and exploring blockchain-based solutions to enhance its financial offerings.
In June 2024, DBS Bank has partnered with digital payment provider Ant International to launch a blockchain-based treasury and cash management solution.
DBS Treasury Tokens, to be used by Ant International, run on a DBS-approved blockchain.
This blockchain is designed specifically for DBS entities in various markets, enabling treasury management and immediate and liquid liquidity.
DBS built its blockchain to be compatible with the Ethereum Virtual Machine (EVM), a widely used framework that enables smart contracts.
In addition, the DBS blockchain is integrated with Ant International’s vault management platform, Whale.
The bank has also integrated blockchain technology into a separate pilot program to facilitate the distribution of government grants.
Within the framework of the project, the bank will partner with Enterprise Singapore (EnterpriseSG) and the Singapore Fintech Association (SFA).
DBS’ involvement in the project is a continuation of its participation in the Orchid Project, a multi-year initiative led by the Monetary Authority of Singapore (MAS) aimed at developing applications for the digital Singapore dollar.