CME, CBOE Allowed To Trade Bitcoin Futures

CME Group and Cboe Global Markets got the green light from regulators to list their bitcoin futures, bringing more legitimacy to cryptocurrency, which has been surging in value all year.

According to a report in the Financial Times, the Commodity Futures Trading Commission (CFTC) said late last week the two have agreed to operate under a self-certification, with Cantor Exchange opting to self-certify bitcoin binary options as well. As a result, the futures exchanges have to be on the lookout for potential manipulation in the market and for big drops or outages.

What’s more, because the two exchanges have opted for self-certification, the CFTC will only have a short period of time to review the products. The regulator can reject the product, but their approval isn’t required, noted the report.

News of the CFTC’s announcement sent both the CME and Cboe higher in trading late last week, with the Financial Times reporting record highs for the two stocks.

Chris Concannon, president of Cboe, told the Financial Times that the decision to self-certify was made after speaking with the CFTC. Christopher Giancarlo, chairman of the CFTC, said in a statement that bitcoin is unique for the commission, prompting extensive talks in recent months about oversight of this cryptocurrency. He warned that cryptocurrency is largely unregulated and that the CFTC has limited statutory oversight.

“There are a number of factors driving the [bitcoin] price right now," said Concannon. "You can’t hedge against bitcoin, you can’t hedge in a fully regulated market.”

CME will list its bitcoin futures contracts on Dec. 18, while Cboe said it will soon make an announcement on when its product will be launching. The companies have acknowledged that they have to create a way to handle the swings in bitcoin's value. CME, for instance, will require an initial margin of 35 percent from investors to back the trades. The regulators “were very adamant about the type of margin and risk controls” for the product, Concannon said in the report.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.