Countdown To Bitcoin’s Future, CME To Launch BTC Futures

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Why Trade Bitcoin Futures?

Get Ready to Trade Bitcoin

Where Are Bitcoin Futures Traded?

Cboe (CFE)

XBT (1 Bitcoin / contract)
Now Available (launched 12/10/2020)

CME Group

BTC (5 Bitcoins / contract)
Launched 12/18/2020

BTC Futures

The CME Group contract (symbol “BTC”) began trading on December 18, 2020, building off of the success of the BRR and demand for a regulated trading venue for the digital asset market. The contract is cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin. Bitcoin futures are listed on and subject to the rules of CME. 2

According to the CME Group website, margins are calculated using CME’s standard benchmarking process for newly-launched contracts. Margin offsets with other CME products will not be offered initially. Additionally, FCMs may require a margin level beyond CME Clearing’s minimum requirement.

XBT Futures

Cboe Futures Exchange, LLC (CFE) launched trading in Cboe bitcoin futures at 5:00 p.m. Central Time on December 10 under the ticker symbol “XBT”. XBT℠ futures are cash-settled contracts based on the Gemini’s auction price for bitcoin, denominated in U.S. dollars. Gemini Trust Company, LLC (Gemini) is a digital asset exchange and custodian founded in 2020 that allows customers to buy, sell, and store digital assets such as bitcoin, and is subject to fiduciary obligations, capital reserve requirements, and banking compliance standards of the New York State Department of Financial Services. 3

The XBT contract is now available for live trading through our platform.

Bitcoin Futures Contract Specifications

CFE Bitcoin Futures CME Group Bitcoin Futures
Name Cboe Bitcoin (USD) Futures Bitcoin Futures
Listing Date December 10, 2020 December 18, 2020
Platform Cboe Command CME Globex
Symbol XBT BTC
Quantity 1 BTC 5 BTC
Valuation Gemini auction price for BTC in U.S. dollars CME CF BTC Reference Rate (BRR)
Tick Size $10.00 $5.00
Tick Value $10.00 $25.00
Settlement Financial Financial
Trading Hours Sunday: 5:00 p.m. CST to Monday 3:15 p.m. CST
Tuesday to Friday: 3:30 p.m. CST to 3:15 p.m. CST
Sunday to Friday 6:00 p.m. CST to 5:00 p.m. CST
(60-minute break each day beginning at 5:00 p.m)
Full Contract Specs XBT Contract Specs BTC Contract Specs

1 Source: CME Group Bitcoin Reference Rate (BRR), 1 Bitcoin equals 6275.66 USD (Last Updated 29 Oct 2020)
2 Source: cmegroup.com
3 Source: cfe.cboe.com

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GLOBAL ASSET ADVISORS LLC DOES BUSINESS AS FUTURESONLINE (FOL) AND IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG), A FUTURE COMMISSION MERCHANT & RETAIL FOREIGN EXCHANGE DEALER. GCG IS WHOLLY OWNED BY GAIN CAPITAL HOLDINGS INC, WHEREAS FOL IS WHOLLY OWNED BY GLOBAL FUTURES AND FOREX LTD.

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A FUTURESONLINE BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES. FUTURESONLINE, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

Countdown To Bitcoin’s Future, CME To Launch BTC Futures

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‘No Change’ to Bitcoin Futures Plans, CME Says, as Cboe Pulls Back

Anna Baydakova

‘No Change’ to Bitcoin Futures Plans, CME Says, as Cboe Pulls Back

It’s business as usual for CME Group’s bitcoin futures market, despite a retrenchment by rival derivatives exchange operator Cboe Global Markets.

Contacted by CoinDesk Friday, a spokesperson for CME said the exchange has “no changes to announce re our bitcoin futures contract” and declined to comment on Cboe’s pullback.

The affirmation is notable in light of the news Thursday that Cboe will not add a bitcoin futures contract for trading in March.

This means that after the last currently traded futures expire in June, this market will essentially come to a halt at Cboe Futures Exchange (CFE), at least until new futures get listed.

“CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading,” the company said in its notice to investors.

A spokesperson for Cboe declined to comment beyond Thursday’s product update.

The difference in outcomes isn’t all that surprising since CME’s volumes have been approximately more than double Cboe’s.

As of March 14, for example, the daily trading volume of CME’s bitcoin futures was reported at 4,666 contracts, compared to 2,089 contracts at Cboe.

Product-market fit

Market participants offered several explanations for CME’s outperformance of Cboe in bitcoin futures.

One reason could be the difference in how the two exchanges approached the product and marketed it, Lanre Sarumi, CEO of a crypto asset derivative exchange Level Trading Field, told CoinDesk.

First of all, CME made its product available to a larger group of traders from the very beginning, Sarumi explained, saying:

“Connecting to both CME and Cboe is expensive. If you are already trading other products on an exchange, then there is no new cost. If not, you must pay for connectivity, software license, market data, cross connects etc. — all that just to trade one new product?”

Cboe put the bitcoin futures on its Cboe Futures Exchange (CFE), Sarumi goes on, where people mostly trade Cboe Volatility Index (VX) Futures: “If you don’t trade VX then do you want to pay hundreds of dollars extra per account just to dabble in bitcoin?”

CME group, on the other hand, put bitcoin in the equities group on the CME exchange, which offers a lot of products and asset classes enjoying large daily volumes, Sarumi said. So a lot of traders already trading various assets at CME had no additional steps to take to get into bitcoin.

Other intangibles

In addition, CME invested more effort in promoting its futures than Cboe did, Sarumi believes. “Cboe was more like ‘build it and they will come.’”

The price discovery method could also contribute to CME’s advantage: while Cboe’s relies on an auction at the Gemini exchange, CME settles to an aggregate price of several spot markets, which might look more reliable to traders.

John Todaro, director of research at TradeBlock, says CME’s strategy might have had more success due to greater flexibility.

“CME had greater position limits, allowing single accounts to hold a larger number of contracts,” he told CoinDesk. “Over time, the CME gained greater market share. The Cboe raised contract limits in order to remain competitive late in the summer of 2020, but by this time the CME was trading in significantly higher volume.”

Image of CME director of equity products Tim McCourt via CoinDesk archives

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

It’s Official – CME Group to Launch Bitcoin Futures December 18

The largest options exchange worldwide, the Chicago Mercantile Exchange Group (CME), has announced its official Bitcoin futures contracts will launch on Monday, December 18, 2020.

CME Group Is Pleased to Bring Bitcoin Futures to the Market on December 18

On November 20 the firm CME Group published an error on the company’s bitcoin futures web page stating that its new bitcoin derivatives products would launch on December 10. Later that day, the company announced it was a mistake, and that the date was incorrect. Now on December 1, the exchange has announced its bitcoin-based self-certified initial listings will be available on December 18. Terry Duffy, CME Group’s Chairman and Chief Executive Officer explains;

We are pleased to bring Bitcoin futures to the 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.

A Continued Collaboration With U.S. Regulators and Reputable Cryptocurrency Trading Platforms

CME Group’s bitcoin futures products will be available for trade on the CME Globex electronic trading platform. Alongside this, the futures have been submitted for the CME Clearport on Sunday, December 17 and trading will begin the following day. The bitcoin futures provided by CME will be cash-settled by referencing the CME CF Bitcoin Reference Rate (BRR) . The rate is based on a daily rate utilizing the USD price of bitcoin across multiple spot exchanges.

“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,” CME’s CEO details.

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.

The options exchange has been calculating and publishing the BRR with the help of Crypto Facilities Ltd. The calculation window for the aggregated trade flow ends at 4:00 pm London time. Further, CME details the BRR utilizes the “IOSCO Principles for Financial Benchmarks,” alongside leveraging well-known cryptocurrency exchange spot prices from Kraken, Itbit, GDAX, and Bitstamp. The news also follows JP Morgan and Nasdaq revealing they plan to offer bitcoin futures contracts as well.

What do you think about CME Group launching it’s bitcoin futures on December 18? Let us know in the comments below.

Images via Shutterstock, Pixabay, and CME Group.

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