CME Group Bitcoin Futures to Require 35% Margin, Launch in Mid-December

The Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOE) have both issued separate announcements to specify details about their upcoming Bitcoin futures contracts. The CME said that live trading on its cash-settled contract will begin on Monday, the 18th of December.

Earlier today, the CFTC issued a statement in which Chairman Giancarlo outlined that cash Bitcoin exchanges should be sharing data with the regulated ones and the regulator itself. The move is aiming to reduce the potential for price manipulation.

Commenting on the announcement, CME CEO Terry Duffy said: “We are pleased to bring Bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities.”

“Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward.”

Margin Requirements Set at 35%

Prices of Bitcoin soared back above $10,000 on the news and broad crypto markets are rallying in tandem with the mainstream cryptocurrency. The CME is initially setting margin requirements for the contract to 35%.

“At launch, our new Bitcoin futures contract will be subject to a variety of risk management tools, including an initial margin of 35 percent, position and intraday price limits, and a number of other risk and credit controls that CME Group offers on all of its products,” Mr Duffy said.

As already outlined by the company in previous announcements, the new contract will be traded via the CME Globex electronic trading platform. Clearing will be executed via CME ClearPort.

The price used by the CME will be based on the CME CF Bitcoin Reference Rate (BRR). It will be used as a once-a-day reference rate of the US dollar price of Bitcoin. The benchmark will be calculated using data from Bitstamp, GDAX, itBit and Kraken.

CBOE the Way, Market Manipulation Worries

The CBOE is following closely with its own contract, aimed to get to market after seeing final approval from the CFTC. The company has filed a product certification with the regulator and is expecting the review.

The CBOE made its product available for testing on the 13th of November, 2017. It trades under the XBT symbol with market data to be made available over the exchange’s feeds.

Following today’s CFTC announcement, the market manipulation worries are increasingly interesting for prospective Bitcoin futures trades and crypto enthusiasts alike.

It is still unclear whether the exchanges will agree to share their data with the regulated exchanges and the CFTC, and whether this is sufficient for the prevention of cash prices manipulation of Bitcoin.

While the exchanges that form the CME’s Bitcoin Reference Rate might share their data, deals on other exchanges could theoretically affect prices.

(Photo: pickpik)

Bitcoin (BTC) $ 62,226.67 0.14%
Ethereum (ETH) $ 3,435.02 0.12%
Tether (USDT) $ 1.00 0.07%
BNB (BNB) $ 410.39 0.79%
Solana (SOL) $ 130.97 0.03%
XRP (XRP) $ 0.634957 6.62%
Lido Staked Ether (STETH) $ 3,429.34 0.04%
USDC (USDC) $ 1.00 0.08%
Cardano (ADA) $ 0.742069 7.09%
Dogecoin (DOGE) $ 0.142203 4.65%
$0.0000  $0.0000  (0.00%)
$0.0000  $0.0000  (0.00%)
$0.0000  $0.0000  (0.00%)
$0.0000  $0.0000  (0.00%)
$0.0000  $0.0000  (0.00%)
$0.0000  $0.0000  (0.00%)