CME Group, the largest derivatives exchange in the world, has published more information concerning upcoming bitcoin futures and announced they will begin trading on Dec. 11, excluding any unforeseen adjournments from regulators.
“Effective Sunday 10 December 2017 for trade date Monday 11 December 2017, and pending all relevant regulatory review periods, please be advised that CME will launch Bitcoin Futures,” stated the company’s website.
The cryptocurrency contracts will be settled in cash utilizing CME’s existing bitcoin price indices.
The company also addressed how they will manage hypothetical substantial price swings.
“Special price fluctuation limits equal to 7% above and below prior settlement price and 13% above and below prior settlement price and a price limit of 20% above or below the previous settlement price. Trading will not be permitted outside the 20% above and below prior settlement price,” the company clarified.
“Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract. As the world’s largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities,” said Terry Duffy, CEO of CME Group.
Recent attempts to generate financial creations that deal with cryptocurrency have been dismissed, predominantly that which include the formation of derivatives agreements.
However, it’s not entirely impossible.
LedgerX, a New York-based cryptocurrency trading platform, obtained the agency’s authorization to clear derivatives in July, and started presenting institutional clients the capability to trade bitcoin options two weeks ago.
LedgerX CEO, Paul Chou, said the company has cleared $1 million in the first week, followed by $2 million in the second week.
Chou said he foresees more exchanges inaugurate equivalent products.