World's largest exchange CME launches Bitcoin futures trading

Cornelia Mascio
Dicembre 18, 2017

Last week, Chicago-based derivatives exchange Cboe Global Markets launched bitcoin futures, which saw the price surge almost 20 percent in its debut.

As bitcoin's price has skyrocketed this year, largely under its own momentum, interest on Wall Street has grown. CME is a larger venue, handling trading volumes an average 55 times greater that those of the CBOE.

The January CME contract will trade on.

Bitcoin investors expect futures volumes to perk up when CME Group Inc, the world's largest derivatives exchange operator, launches its own contract to wager on the cryptocurrency on Sunday.

"Bitcoin is not money", he said in an interview, and urged regulators to intervene. "We have allowed our clients to go long or short to take advantage of dislocations between the futures and the underlying spot market".

The CME bitcoin futures, like the bitcoin futures that now trade on the Chicago Board Options Exchange, do not involve actual bitcoin.

Many see the launch of bitcoin futures as a step towards establishing the digital currency as a legitimate asset class. With futures, "you don't hold the physical bitcoin, which solves custody issues and counterparty risks with these less-regulated exchanges".

Bitcoin is traded against the dollar, giving the cryptocurrency an indirect backing from the Federal Reserve through the regulatory framework of the CBOE and CME. The opening price for the January contract was $20,650, $1,150 over the pre-settled price of $19,500.

"We believe that CME's launch of the new Bitcoin futures contract represents a major milestone in the development of cryptocurrency derivatives markets that appear to be more fair and transparent than trading the underlying cryptocurrency", said John Bartleman, President of TradeStation Group, Inc., the parent company of TradeStation.

Gurbacs added that Bitcoin futures are a financial instrument themselves, albeit still quite volatile. By Friday, volume had stabilized at roughly more than 1,000 contracts.

Some brokerages didn't immediately give customers access to bitcoin futures. On its debut last Sunday, the Cboe traded almost 4,000 contracts during the full session. E*Trade Financial considering offering bitcoin futures, according to a person familiar with the matter who asked not to be named. "We're excited to support CME's new offering from the first day of trading and to extend to TradeStation clients the opportunity to trade this emerging market". Goldman Sachs Group Inc. demanded some clients set aside collateral equal to 100 per cent of the value of their trades, people familiar with the investments said last week. "So there is a possibility that the CME contract may generate more interest and more volume".

It's not uncommon for a brokerage to impose steeper requirements than the exchange.

About 20 firms participated, including Interactive Brokers and Wedbush Futures.

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