- Euro-linked currency derivatives becoming more popular among European retail investors
- Proportion of Euro currency pairs traded on Spectrum Markets doubled during this year
- All-time record high of 163.9 million securitised derivatives traded on Spectrum in September
Spectrum Markets, the pan-European trading venue for securitised derivatives, has published its SERIX sentiment data for European retail investors for September, highlighting strong bearish trading on the Euro against the British Pound and Japanese Yen, in contrast to wider market sentiment on these currencies.
The SERIX value indicates retail investor sentiment, with a number above 100 marking bullish sentiment, and a number below 100 indicating bearish sentiment. (See below for more information on the methodology).
“We know retail investors active on Spectrum Markets typically use these derivative products as part of a wider exposure strategy, for example to gain a leverage effect or hedge position elsewhere in their portfolio. It’s likely this kind of tactical exposure explains some of the bearish activity we’re seeing on the Euro, particularly against the Pound and Yen which have both had a pretty tough time recently,” explains Michael Hall, Head of Distribution at Spectrum Markets.
More recently, the proportion of trading related to Euro currency pairs on Spectrum Markets has grown significantly, doubling in the last two months when compared to the start of the year, as these products gain favour with retail investors, particularly for short-term tactical trading in response to events like the UK government’s mini-budget and the Bank of Japan’s recent currency interventions.
"We can identify a growing interest among retail investors in Euro-linked Turbo Warrants as a way of gaining specific, targeted exposure to global FX markets. As markets are becoming increasingly volatile, FX risks are rising, and some investors are seeking to hedge currency exposure with securitised derivatives in order to build some protection into their portfolios. International companies have always hedged against currency risk to some extent, and retail investors are now following the same principle,” adds Hall.
In September 2022, a record high of 163.9 million securitised derivatives were traded on Spectrum, with 37.3% of trades taking place outside of traditional hours (i.e., between 17:30 and 9:00 CET).
87.8% of the traded derivatives were on indices, 3.5% on commodities, 7.6% on currency pairs, 0.8% on equities and 0.3% on cryptocurrencies, with the top three traded underlying markets being DAX 40 (28.3%), S&P 500 (23.9%) and NASDAQ 100 (16.4%).
Looking at the SERIX data for the top three underlying markets, the DAX 40 shifted to a neutral 100 from 99. Meanwhile, the S&P 500 slightly increased from a bearish 97 to 102 and NASDAQ 100 saw a similar rise, from 98 to a bullish 102.
Calculating SERIX data
The Spectrum European Retail Investor Index (SERIX), uses the exchange’s pan-European trading data to shed light on investor sentiment towards current development in financial markets.
The index is calculated on a monthly basis by analysing retail investor trades placed and subtracting the proportion of bearish trades from the proportion of bullish trades, to give a single figure (rebased at 100) that indicates the strength and direction of sentiment:
SERIX = (% bullish trades - % bearish trades) + 100
Trades where long instruments are bought and trades where short instruments are sold are both considered bullish trades, while trades where long instruments are sold and trades where short instruments are bought are considered bearish trades. Trades that are matched by retail clients are disregarded. (For a detailed methodology and examples, please visit this link).
About Spectrum Markets
Spectrum Markets is the trading name of Spectrum MTF Operator GmbH. Headquartered in Frankfurt am Main, Germany, it is a pan-European trading venue for securitised derivatives aimed at financial institutions and their retail investors. Since launch, trading has been available in: Germany, France, Italy, Spain, Sweden, Norway, the Netherlands, Ireland, and Finland.
Acting as a MiFID II regulated trading venue authorised and supervised by BaFin, the exchange uses a uniquely open architecture system to allow investors to trade with increased choice, control and stability. Through its pan-European ISIN, 24/5 trading services and its own proprietary venue, Spectrum enables a guaranteed baseline level of liquidity over a range of products and is able to swiftly and safely match a significant number of orders and process multiple quotes every second.
Further information can be found at spectrum-markets.com
Media contact
Liminal
T: +44 203 778 1103
E-Mail: vasiliki@liminalcommunications.com
Disclaimer
All information contained herein is for information purpose only and addresses exclusively Members of Spectrum Markets and persons interested in becoming a Member of Spectrum Markets. Nothing herein constitutes an offer to sell or a solicitation of an offer to purchase any securitised derivatives listed on Spectrum Markets or any product described herein. Spectrum Markets does not provide financial services, such as investment advice or investment brokering. Prospective retail investors can trade such products only with their brokers. The information herein does not constitute investment advice or an investment recommendation. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Turbo Warrants are complex financial instruments and investors may experience a total loss.
