CME Group today confirmed the launch date of its Ether futures contracts as of February 8, 2021, the latest move by the world’s largest futures exchange operator to expand into the crypto business.
CME’s Ether options are currently being reviewed by regulators, and the exchange operator confirmed that once the addition clears, they will be available for purchase.
Chicago-based CME has offered more insights about its newest crypto derivatives. The Ether futures will be priced off at the CME CF Ether-Dollar Reference Rate, an index that was developed in partnership with Crypto Facilities to provide real-time ether price in dollars. The index references pricing data using transactions and order book activity from several cryptocurrency exchanges, currently made up of Kraken and Bitstamp,
Additionally, the exchange operator touts the benefits of new futures contracts as the potential to save on margins, through margin offsets.
CME Group has been reviewing client demand and crypto traders’ interest in Ether derivatives after launching its index tracking prices of the second-largest cryptocurrency.
Moreover, the CME provided updated metrics about its Bitcoin futures, which averaged 8,560 contracts per day in 2020 (equal to around 42,800Bitcoin), apparently representing institutional interest.
Commenting on the news, Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products said: “Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency. Ethereum is the second-largest cryptocurrency by both market capitalization and daily volume. The introduction of listed Ether futures to our time-tested, regulated CME Group derivatives marketplace will help to create a forward curve, so Ethereum market participants can better manage price risk.”
With extra regulatory safeguards, CME Group introduced Bitcoin futures in December 2017, marking a major step in the path to legitimatizing the cryptocurrency. Earlier this year, it launched options on its Bitcoin futures contracts, a sign of its growing commitment to cryptocurrencies.
The Chicago-based venue was not the only exchange to try to capitalize on the crypto frenzy as Cboe pioneered with its own cash-settled bitcoin contracts. However, Cboe decided earlier last year to discontinue its bitcoin futures trading activities. On the other hand, CME pressed onward with new crypto products.