The Frankfurt-based index provider is targeting structuring desks as its increasing focus on the sell-side begins to pay off with three signed investment banks.
BITA Indexes is expecting to see its first mandate in the structured notes market in Europe by the third quarter as its conversations with the sell-side deepen and branch out from the delta-1 business.
The idea is to quickly ideate and bring a theme to market from product ideation in the form of a structured note - Varun Jain
“The idea is to quickly ideate and bring a theme to market in the form of a structured note,” said Varun Jain (pictured), chief revenue officer at BITA, citing the emergence of DeepSeek in January as an example.
The issuer will be a top-tier European investment bank, among the three banks BITA signed licensing agreements with for delta-1 products or basket calculation late last year, according to Jain. The underlying asset could be single stock decrement indices or thematic indices, which have gained ground in the French market.
Additionally, the index provider is in discussions with a non-bank issuer which has a “very nimble” approach given fewer balance sheet constraints than traditional investment banks, according to Jain.
Setting off with exchange-traded fund (ETF) providers and asset managers, BITA has been building up its footprint in the sell-side over the past 12 months with Jain joining in January from MerQube to lead the initiative.
Structured products desks on the sell-side are “a strategic focus area” for BITA this year, said Jain.
The new business continues to leverage an end-to-end infrastructure for self-indexing and systematic investing that BITA has offered to over 40 clients including Swiss SIX Exchange, CBOE and retail trading houses Plus 500, IG Group and XM.
“The delta-1 desk of a bank is essentially using the infrastructure to do optimised indices in a scalable way. Once they like the optimiser that we’ve built for them, it’s very easy for them to scale this to hundreds of indices,” said Jain.
The cloud-based platform for equity assets allows clients to ideate by choosing from a universe of over 25,000 stocks and applying filters based on sector, thematic, fundamentals and ESG.
“What has been most interesting to me is that the investments banks are coming back to us with use cases that we didn’t even think of at the beginning of our conversation, such as [around] custom baskets for their hedge fund clients.”
The biggest proportion of BITA’s pipeline with the sell-side lies in the technology, custom basket calculation and structured product licensing, said Jain.
The seven-year-old company is seeking to extend its success in sector or thematic indices for structured products.
“Defined outcome indices embedded with optionality themselves as seen in the ETF segment in the US is the next segment that we would potentially target,” he added.
Backed by a team of 15 equity researchers based in Germany and Venezuela, the infrastructure features a thematic database covering 75 themes and more than 300 sub-themes.
There is currently over US$3 billion in ETF assets tracking a total of 19 BITA indices, led by the T-REX 2X Long MSTR Daily Target ETF which has logged US$1.9 billion since its inception in September 2024. Listed on Nasdaq, NYSE or Cboe, the ETFs are managed by RexShares, Themes ETF, ASX Investments, Global X, Defiance, Vista Shares or YieldMax, according to BITA.
As geopolitical risks are coming into greater play, topical themes follow closely, such as defence and energy for the European market. At the same time, themes around artificial intelligence (AI) have stayed in the spotlight, according to Jain.
“We are starting to work with some non-US issuers as well, in particular Israel where there are a few big ETF shops tracking very topical themes,” he said.
*The ETF assets amount in this article has been updated according to new figures provided by BITA.
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