Not long ago, the CME Group, which is also known as the world’s largest futures exchange has announced that they are planning to introduce bitcoin futures trading to their wide range of institutional investors by the end of the year. Their initial announcement brought along a price surge for the digital currency, yet according to recent reports, the CME Group is looking for methods to help reduce the volatility associated with the cryptocurrency.
With this in mind, the CME will likely implement a few special price fluctuations limits on their platform, situated at 13% above and 7% below the settlement price of the digital currency. This move would limit trading activity outside the 20% range, which in return would help bring down the volatility of Bitcoin when trading futures. These limits are more or less similar to the currently allowed limits for the U.S. stock index future. However, due to the volatility of bitcoin, they could become a lot more relevant.
The idea behind this is to help ease many of the institutional investor concerns related to digital currencies. After all, the bitcoin price has often been seen either increasing or decreasing with several hundred dollars in a single day.
Other reports indicate that the self-certification application for the CME, listed at the U.S. Commodity Futures Trading Commission is very likely to go through, thus bringing this project one step closer to life.
The months associated with the initial listings will be December, January, February and March. The CME Group also announced that contracts will expire at 4PM London time. Currently, the trading hours for the bitcoin futures are scheduled to be all week, from 6 PM to 5 PM ET. All bitcoin futures trading will happen via Globex, which is the company’s electronic trading system, and ClearPort, which is the firm’s OTC market.
It seems like CME’s decision to introduce bitcoin futures trading has also encouraged other companies to begin offering the very same service. For instance, Cboe Options will also offer bitcoin trading for institutionalized investors in early 2018.
It is now only a matter of time before the first bitcoin-based exchange-traded fund (ETF) is also approved.
Based on everything that has been outlined so far, what are your thoughts on the latest developments? Now that SegWit2x has been cancelled, will the price surge even higher? Let us know your thoughts in the comment section below.
Author: Daniel Dob