CME Group to Begin Trading Bitcoin Futures

"GIVEN INCREASING CLIENT INTEREST IN THE EVOLVING CRYPTOCURRENCY MARKETS, WE HAVE DECIDED TO INTRODUCE A BITCOIN FUTURES CONTRACT."

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CHICAGO — The Chicago Mercantile Exchange (CME) announced Tuesday that it intends to commence bitcoin futures in the fourth quarter, awaiting regulatory approval.

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Terrence A. Duffy
Terrence A. Duffy

“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.

The precise date it will made public has yet to be disclosed but CME did say that the futures would be paid in cash as well as the price would be based off the CME CF Bitcoin Reference Rate, an index the company began in Nov. 2016 in partnership with Crypto Facilities.

According to CME, the project is dependent on authorization from the U.S. Commodity Futures Trading Commission.

“We’ve been working with the regulator. They understand our application. And they understand our model very, very well,” Duffy said.

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.

Paul L. Chou
Paul L. Chou

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.

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