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CME's Bitcoin Futures Debut Wins With Trading Value

20 December 2017

Some of the larger exchanges have also reported denial of service (DDOS) attacks, rendering their websites unusable and investors unable to trade. "CME is a way bigger player in futures than cboe", John Spallanzani, chief macro strategist at CFI Group, told Business Insider. The Chicago-based exchange got off to a quicker start with more efficient pricing, according to reports. On its debut on December 10, the Cboe traded almost 4,000 contracts during the full session.

Bitcoin surged toward $20,000 in the minutes before trading began at CME, before paring gains. At that time, the opening price for the January contract was $20,650, $1,150 over the last price on CME's reference rate ($19,500).

"People were better prepared" for the start of trading at CME, said Bobby Cho, head of trading at Cumberland, the cryptocurrency trading unit of DRW Holdings LLC.

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TradeStation also noted that its supported the launch of the first Bitcoin futures offering from the U.S. exchange. The price of Cboe's product is derived from the cryptocurrency's price at a single exchange; CME's is based off four.

Based on the CME CF Bitcoin Reference Rate (BRR), the new CME contract is cash-settled in USA dollars. Institutional traders can buy and sell futures, but only a few of them can hold or transact in actual bitcoin for regulatory reasons. The margin for an S&P 500 futures contract, by contrast, is just 5 per cent, analysts said.

For more information about bitcoin futures, read Level Trading Field CEO Lanre Sarumi's three-part CoinDesk series exploring the topic.

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Cboe's website stalled during its launch. It appeared to weather the traffic. "The CME futures are trading at a premium to Cboe futures, but the premium has come in a bit since the open", See said. "The prices are moving around pretty fast".

"The order book is thin". By Sunday night, it was similar to CME's.

Banks and brokers who are offering access are being cautious. Goldman Sachs Group Inc. demanded that some clients set aside collateral that equaled 100 per cent of the value of their trade. The margin requirement is 35 per cent at CME and 40 per cent at Cboe, reflecting bitcoin's volatility.

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It's not uncommon for a brokerage to impose steeper requirements than the exchange. Short sellers face expensive trading The futures exchanges offer short sellers a way of placing short bets on bitcoin but even when the second exchange opened trading the price of bitcoin continued an upward trend in price.

CME's Bitcoin Futures Debut Wins With Trading Value