A senior executive of a large derivative and global markets company, CME (Chicago Mercantile Exchange) revealed that it has no motive to launch physically-settled bitcoin contracts.
In an interview with the Markets Media, the Managing Director and Global Head of Equity Products and Alternative Investments at CME Group, Tim McCourt says that all new contracts or products are based on customer’s choice and demand.
It’s worth noting that the Chicago Mercantile Exchange (CME) has been dealing with the Bitcoin futures contract since Dec 2017, the same year when Bitcoin was trading at nearly $20000.
“Since we launched bitcoin futures in December 2017, the number one demand from customers has been for options on our futures,” McCourt affirmed
Besides futures contracts, CME has also revealed its plans of launching the bitcoin options contracts in the first quarter of 2020 ( citing pending regulatory review). Moreover, Tim McCourt sees Bitcoin interest growing and says that;
“The institutional interest in bitcoin is growing but they need time to become familiar with the market and get approval to use new products.”
McCourt further states that since inception of CME’s bitcoin futures, the firm witnessed over 3,300 individual accounts that have traded the product, and so far there have been 20 successful bitcoin futures expiration settlements.
Furthermore, in May, the trading record of Bitcoin reached an all-time high of about $1.3bn. Additionally in July CME has traded each day a larger number of open interest holders, recorded to be 56 on an average scale. Also in 2019, there are nearly 7000 CME bitcoin futures contracts which are approximately 35,000 bitcoin.
Currently, the forthcoming options are undergoing the CME Group’s standard testing procedures. Additionally, the new options can use CME Group’s existing technology, matching engine and clearing mechanisms.
However relatively rival’s backed platform that has recently received hype on launching bitcoin futures was Bakkt. A digital assets platform that holds Bitcoin futures exchange, Bakkt owned by rival exchange ICE (Intercontinental Exchange), becomes successful in launching bitcoin futures that are physically settled. Regulated by the New York Department of Financial Services contracts are settled by a qualified custodian at Bakkt. Although the product has not reached its demand initially as Bakkt is looking forward to tying up with some core clients as some clients do not have the permission to trade Bitcoin physically-settled futures contracts.
In a nuttshell, the present institutional participation in CME’s bitcoin futures has reportedly engaged between hedge funds, commodity trading advisors and asset managers, including hedge funds and trading firms which are crypto-based.
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