Bitcoin Futures Date Confirmed for CME Group!
Many have been waiting for further certainty on when the Chicago based derivatives exchange operator CME, would launch, well, now, they have an answer. CME Group is the largest derivatives market on the planet and have finally announced they have self certified the initial listing of their Bitcoin futures contract for launch on December 18,2017.
The chairman of the company, Terry Duffy was the one who announced this news on Friday, stating that his firm has the necessary approvals from the appropriate parties such as the U.S Commodity Futures Trading Commission (CFTC) to be able to act on their intentions of deploying bitcoin futures contracts. They will be able to do so within about two weeks.
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.”
The language is clear and is what investors need to hear, a “regulated offering that will provide investors with transparency, price discovery and risk transfer capabilities” are aspects that they are used to with current equities and commodities and other traditional financial instruments.
It is important to note that these contracts will not be settled in bitcoin but in cash, this means that there will be no exchange of bitcoins when contracts are settled. The only thing that will be exchanged is cash.
CME will be utilizing data from the bitcoin exchanges like Bitstamp, GDAX and other to calculate their Bitcoin Reference Rate (BBR).
There are institutional investors who want further sort of checks and balances even while thinking that bitcoin and others is a good idea. People like, Thomas Peterffy, he thinks that since cryptocurrencies are not mature and have not been around, tested or regulated and thus don’t have foundational market, they need to be treated with great caution.
“The products and their markets have existed for fewer than 10 years and bear little if any relationship to any economic circumstance or reality in the real world.”
The CEO of the CME, responded to these sorts of people and said that they are putting in place various risk management measures to mitigate potential problems. He noted that they have studied the potential effects of bitcoin to spill over into other markets and have built in safeguards to make sure that negative effects don’t occur.
He stressed that they performed and went through a rigorous due diligence process with the CFTC and understand the cryptocurrency is akin to venturing into uncharted waters. So, they will be working with the CFTC & clients going forward to regulate and adjust accordingly.
The announcement is historic because then bitcoin will receive a similar treatment like the other long lasting commodities that have been on the exchange. The fact that it will trade alongside these other futures contracts that have been around a while gives it a whole new level of credibility incentivizing further players to jump into the gain and take different positions for or against the virtual currency.