Bitcoin Futures Are The New Competition

Bitcoin Futures Are The New Competition

The wealth and risk management marketplace known as The CME Group announced it’s launch of its self-certified initial listing of its Bitcoin futures contract for December 18th, 2017.  In their announcement on their website they said:

“We are pleased to bring Bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities,” Terry Duffy, CME Group Chief Executive Officer commented.  “Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward.  At launch, our new Bitcoin futures contract will be subject to a variety of risk management tools, including an initial margin of 35 percent, position and intraday price limits, and a number of other risk and credit controls that CME Group offers on all of its products.” 

This exciting contract is among the first of its type, worldwide and it will be listed on the CME marketplace, and thus, subject to CME rules and guidelines.  Trading will happen through the CME Globex which is an electronic trading platform.

The CME Group will settle all Bitcoin futures with cash, using the CME CF Bitcoin Reference  (BRR) used as a once a day reference rate of the USD price of bitcoin. The  BRR pulls aggregated data from Bitstamp, GDAX, itBit, and Kraken. For more information on the CME Group’s plans for listing these futures check them out at cmegroup.com/bitcoinfutures.

This may be a sign of HUGE increases in the value of the beloved bitcoin, and much sooner than many of us may have predicted.  Headlines all over the internet are heating up with competing companies announcing their starting dates for bitcoin futures, all racing to get those first days in as the leader in these types of contracts.  The CBOE announced that it will begin trading bitcoin futures on December 10th 2017, a full week earlier than the CME group.  The first whole trading day will actually be on December 11th, 2017, globally. Then to further increase the competitive air,  Nasdaq,  announced that it too is also introducing cryptocurrency futures and expects to begin trading in early 2018.  The Nasdaq website hints at ETFs coming back into consideration by the SEC after they denied applications to start bitcoin ETFs earlier this year.

There is a lot being considered in terms of whether the introduction of bitcoin futures will increase or decrease the volatility that cryptocurrency users call the “bitcoin rollercoaster”.  The CME plans to manage this potential issue by using price limits that would slow or even stop all trading temporarily.  This slowing action will be triggered by gains or losses of 7 percent, 13 percent, and 20 percent.   Prices won’t be able to move up or down more than 20 percent from the previous day’s close.

To hang on to the competitive edge The CBOE is offering free trades through December although no mention was made regarding the prices thereafter, so read the small print carefully before anything goes into long-term contracts.

Cheers, crypto crowd! The future (of Futures) looks mighty and strong!