CME Group Announces 18 December as the Launch Date of Bitcoin Futures

A lot has been talked and discussed about CME Group’s plans to introduce Bitcoin futures contract this December. Finally, the world’s most leading derivatives marketplace, has announced that the initial listing of Bitcoin Futures contract will launch on 18th December 2017.

Subject to the rules formulated by the CME Group, the new contract will be listed and traded on the CME Globex electronic trading platform. This announcement has arrived after the Commodities Futures Trading Commission (CFTC) agreed that it will grant permission to the CME Group and the CBOE Group to launch Bitcoin Futures Contracts. In addition, the commission also said that Cantor Exchange has self-certified new contract for Binary Bitcoin Options.

A CFTC release stated that "Commission staff held rigorous discussions with CME over the course of six weeks, CFE over the course of four months, and had numerous calls with Cantor.” While commenting on granting permission to the exchanges, CFTC chairman J. Christopher Giancarlo said: "Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past. As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets.”

Upon getting the much-awaited person from CFTC, Terry Duffy, CME Group Chairman and CEO 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. 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.”

CME Group’s decision to bring Bitcoin to derivatives marketplace was announced one month back following which a historic rally, in Bitcoin prices, was seen in the past one month. There was a huge participation from both retail and institutional investors supporting the rally taking the price of Bitcoin from $5,000 to its all-time high about $11,000, a whopping 100% jump in valuations over the period of just one month.

Following the CME Group’s announcement, many other financial institutions started showing confidence in this most popular cryptocurrency and owing to high investor-demand, several institutions are now considering to launch Bitcoin-based investment products in the next year - 2018.

The Bitcoin Futures Contract by CME Group will be completely 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. Crypto Group and CME Group formulated the BRR and published it one year back in November 2016. The BRR is calculated based on data coming from four different exchanges namely - Bitstamp, GDAX, itBit and Kraken.

In addition to CME Group and CBOE group, reports about Nasdaq Inc and JPMorgan planning for Bitcoin futures contract has recently emerged.