Bitcoin Futures Will Be Listed Listed in the Second Week of December
CME Group, the world’s largest futures exchange, will list a Bitcoin contract in the second week of December. CME is known for having strict price limits and trading halts in place for most of its listed products. This has spurred speculation among cryptocurrency traders that offering a Bitcoin contract will significantly lower the volatility and the frequency of the currency’s notorious flash crashes that occur on some of its less liquid online exchanges.
“I’m not trying to rein in the volatility of Bitcoin,” Terry Duffy, CEO of CME said. “But what I want to do is give it a place for other people to lay out that risk. Today you cannot short bitcoin. So there’s only one way it can go. You either buy it or sell it to somebody else. So you create a two-sided market, I think it’s always much more efficient.”
Asked about price fluctuations & trading halts, he did note that some would be in place in the case of serious price fluctuations. “I think that’s going to add a lot more structure of the marketplace,” he said.
Bitcoin futures will have a price limit of 20% above or below the prior settlement price and price fluctuation limits of 7% and 13% above and below that level. The contract will be cash-settled according to the CME CF Bitcoin Reference Rate (BRR), which tracks several bitcoin trading platforms.
Leo Melamed, the chairman of CME Group, said the purpose of creating bitcoin futures is to enable investors to short-sell bitcoins, making two-way bets possible and to attract more institutional investors. Melamed expressed confidence that the bitcoin will become another asset class in the not-so-distant future, like stocks and gold. “That’s a very important step in bitcoin’s history. We will regulate, make bitcoin not wild, nor wilder. We’ll tame it into a regular type instrument of trade with rules,” he said.