Exchange Traded Commodities

Exchange Traded Commodities (ETCs) are similar to ETFs, except for the fact that they track the performance of an underlying commodity or a commodity index. ETCs are also traded in the same manner as stocks but provide exposure to a range of commodities and commodity indices, which include energy, agriculturals, metals and softs.

ETCs are open-ended securities, just like ETFs, and are just as liquid as the underlying commodities market – either the physical or futures market.

The way the ETC is linked to the underlying commodities depends on the exposure of ETC. ETCs come in five different types of exposure: Physical, Classic, Forward, Short and Leveraged.

  1. Physical ETCs: These are ETCs which are linked to the price of physical precious metals.
  2. Classic ETCs: These are the standard ETCs which are linked to an index based on near-month futures contracts.
  3. Forward ETCs: These are ETCs which are linked to an index based on forward-month futures contracts.
  4. Short ETCs: These are ETCs which are inversely linked to the underlying commodities index.
  5. Leveraged ETCs: These are ETCs which are double-leveraged on the underlying commodities index. The double leverage implies that the movements of the underlying commodity are amplified (doubled).

An example:
If a physical gold ETC is purchased, then the ETC will provide a return equivalent to movements in the gold spot price less fees. If a leveraged crude oil ETC is bought, then the price of the ETC will change daily by a factor of 2 on the daily percentage change in the underlying crude oil index. In other words, if the price of crude oil increases by 50% then the leveraged crude oil ETC will increase by 100%. And vice versa, if the price of crude oil decreases by 50% then the leveraged crude oil ETC will lose 100% of its value.


What categories of ETCs can I trade?
Saxo Bank offers access to ETCs provided by the company ETF Securities within all five ranges of exposure. These ETCs cover the following categories of commodities:

  » Diversified Broad
  » Agriculture
  » Energy
  » Industrial Metals
  » Livestock
  » Precious Metals

On which exchanges can ETCs be traded with Saxo Bank?
Two different exchanges:

  1. United Kingdom: London Stock Exchange
  2. France: Euronext Paris

For a full list of available funds through Saxo Bank click here.

Frequently Asked questions:
Please visit ETF securities for a full FAQ on ETCs.