On December 10th 2017, the CBOE will launch bitcoin contracts for trading on their futures exchange. Below is a description of the key facts associated with the CBOE contracts. My initial thoughts are that with a contract size of 1 BTC on the CBOE compared to 5 BTC for the CME contract, the smaller CBOE contract might make it more accessible to retail traders. I also think that the two contracts with different sizes with some slight basis risk (due to the reference price each contract uses) will complement each other by adding greater liquidity in a similar way that e-mini and miNY contracts did with other futures contracts. Both contracts will be cash settled based on their respective underlying indexes.
If they take off, another outcome of the CBOE futures contracts is that Gemini Exchange will likely get a lot more volume and attention; this is probably good for the Winklevoss twins’ business.
Here are the CBOE contract specs:
CBOE Bitcoin (USD) futures (XBT) are cash-settled futures contracts that are based on the Gemini auction price for bitcoin in U.S. dollars.
Contract multiplier is 1 bitcoin.
Ticker Symbol: XBT
Contract Expirations: “The Exchange may list for trading up to four near-term expiration weeks (‘weekly’ contracts), three near-term serial months (‘serial’ contracts), and three months on the March quarterly cycle (‘quarterly’ contracts).”
“Market Orders for XBT futures contracts will not be accepted. Any Market Orders for XBT futures contracts received by the Exchange will be automatically rejected. Stop Limit Orders are permitted during regular and extended trading hours for the XBT futures contract.”
Minimum Price Intervals: 10.00 points USD/XBT (equal to $10.00 per contract). The individual legs and net prices of spreads in XBT futures may be in increments of 0.01 points USD/XBT (equal to $0.01 per contract).
The reporting limit will be 5 contracts (this seems quite low, but maybe this is something that the CFTC wanted)
There will be price limits: please consult the exchange website for more information.
Very exciting news from CME today, they plan to launch bitcoin futures contracts in Q4 2017! If it comes true, I think this would be one of the most dramatic events in the history of crypto currencies. Having a transparent US regulated futures market (can we also hope for options on futures eventually?) will have a cascading effect on the rest of the market. Think about the reasons why regulators have been denying ETF and other crypto product applications, because they say the secondary market is not developed enough, well, if the CME is hosting a liquid market, it becomes impossible to deny ETF applications. There is every reason to believe once the CME bitcoin markets are established, tracker ETFs will be approved and listed on recognized US exchanges as well.
When FX markets were launched on the CME in the 1970s, they supported the growth of a new global market for free floating fiat currencies. I hope something similar happens as the CME begins to host crypto markets, since it will become impossible for governments to deny their efficacy.
CHICAGO, Oct. 31, 2017 /PRNewswire/ — CME Group, the world’s leading and most diverse derivatives marketplace, today announced it intends to launch bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods. The new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S.
The CME and ICE have each announced they will begin providing data on a bitcoin price index last this year. This is very exciting news for bitcoin participants as it get the market one step closer to derivatives trading, which would bring the possibility of listed futures & options, which would also enable the market to price all sorts of new information that derivatives trading would reveal about bitcoin. Bitcoin derivatives would also open another way for the market to earn a rate of return from the investment of bitcoin and also contribute to better pricing information on the implied interest rate for various types of bitcoin financial transactions.
CHICAGO CME Group Inc (CME.O) plans to begin publishing a daily settlement price for bitcoin and real-time price data as the futures market operator moves into the world of the digital currency. Starting in the fourth quarter, the new settlement price will be published in U.S. dollars at 4 p.m.