CME Traders Prefer Cash-Settled Bitcoin Futures Trading

Chicago Mercantile Exchange (CME) said its clients currently prefer cash-settled Bitcoin futures trading rather than other Bitcoin futures products.

19 May, 2020, | AtoZ MarketsCME is a futures and options contracts exchange. It is one of the largest financial exchanges in the world. Moreover, it became the first US financial exchange to demutualize and a shareholder-owned corporation in late 2000. In 2002, it became a publicly-traded company.

Traders Are Giving Priority to Cash Settled Bitcoin Futures

CME is a regulated platform to trade cash-settled bitcoin futures. Tim McCourt, global head of equity index at the CME, said nowadays traders are trading Cash-Settled Bitcoin futures more than physical-Settled Bitcoin futures. He added:

“So far, clients have expressed a clear preference and priority for a cash-settled product”. 

Bitcoin cash-backed futures products allow investors to gain exposure to Bitcoin without owning the cryptocurrency itself. Bitcoin futures trading let investors speculate on the future price of Bitcoin. McCourt said, “CME’s cash settlement mechanism is based off prices determined on several BTC exchanges, in much the same way as the S&P 500 settlement mechanism is based on prices determined at centralized auction markets.”

Customer Interest Also Spurred at the Launch of Bitcoin Futures

CME launched the Bitcoin futures trading in 2017. Bitcoin price at that time was in a historic run toward $20,000. So, traders’ interest was high for the CME cash-settled Bitcoin futures product. McCourt said, “there was a lot of client and crypto community interest in futures to hedge risk or get exposure to Bitcoin prices. The introduction of CME Bitcoin futures created a forward curve so investors can better manage that price risk.”

Earlier this year, CME launched Bitcoin Futures options. On the first day, Bitcoin Futures options trading volumes surpassed $2.3 million. CME recorded strong activity this year, but the CME closed its Chicago trading floor on 13 March due to Coronavirus. It was the first US exchange that closes a trading floor as a precaution due to Coronavirus.

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