The CME Group announced plans today to launch Bitcoin futures later this year as Bitcoin’s price reaches a new all-time high.
The CME Group, renowned as the world’s leading and most diverse derivatives marketplace, plans to launch Bitcoin futures trading in the fourth quarter of 2017, assuming all relevant regulatory review periods are passed successfully. The announcement was published on the company’s website.
The futures contracts will be cash-settled and based on the CME CF Bitcoin Reference rate (BRR) which acts as a once-a-day reference rate of the USD price of Bitcoin. The group cites increasing client interest in cryptocurrency markets as the reason behind the move.
CME Group Chairman and CEO Terry Duffy states:
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.
The Bitcoin Reference Rate (BRR)
The CME Group and Crypto Facilities Ltd have been calculating and publishing the Bitcoin Reference Rate (BRR) since November 2016. The BRR calculates and aggregates the trade flow of the key major Bitcoin exchanges. Bitstamp, GDAX, itBit, and Kraken are the respective exchanges that currently contribute the pricing data for calculating the BRR.
Crypto Facilities CEO Dr.Timo Schlaefer said:
We are excited to see the BRR used as the settlement mechanism of this important product. The BRR has proven to reliably and transparently reflect global bitcoin-dollar trading and has become the price reference of choice for financial institutions, trading firms, and data providers worldwide.
The CME Group also publishes the CME CF Bitcoin Real Time Index (BRTI) which provides price transparency to the spot Bitcoin market, combining global demand of Bitcoin buys and sells into a consolidated order book giving fair, calculated and instant USD price of Bitcoin in a spot price.
Knock On Effects of The Announcement
The move, if all goes to plan with the regulatory period, will prove to be a huge boost for Bitcoin by enabling access to Bitcoin future trading for those less familiar or trusting of sites outside of the CME Group purview. News of the CME Group plans has already caused an approximate $300 spike in Bitcoin’s price (another all time high for the cryptocurrency), with Bitcoin currently trading at $6369 (GDAX) at the time of writing.
Anticipation of the launch appears high and the optimism of the market looks set to continue Bitcoins ongoing trend of regularly establishing new record levels of value.
Do you manage your portfolio with the CME Group? What are your thoughts on the addition of Bitcoin futures trading? Let us know in the comments below.
Images courtesy of Shutterstock, CME Group
