Moody’s shares positive CBOE Bitcoin Futures trading outlook


Moody’s Investors service shares a positive CBOE Bitcoin Futures trading outlook. The credit agency says that the Bitcoin Future launch will not endanger their credit rating, noting that both central counterparty clearing houses have robust risk management.

16 February, AtoZForex – Moody’s Investors Service is content that the dispatches of Bitcoin Future trading by CME Group and Cboe Global Market won’t influence their financial soundness. The credit rating agency stated that CME Group and Cboe Global Market have active risk management. On the other hand, other positives include low futures’ volumes, and exchanges have the conservative approach to managing Bitcoin exposure.

Positive CBOE Bitcoin Futures trading outlook

Moody’s analyst Fadi Abdel Massih said:

“We expect the CME and Cboe to make conservative adjustments to these margins in response to changing market conditions — namely, a sudden rise in the volatility of Bitcoin prices — as a risk and credit control measure.”

However, Moody’s mentioned that Bitcoin’s high volatility was an essential factor to consider while maintaining investment grade for CME Group and CBOE Global Market. The CME’s rating is Aa3, thus have a stable lookout. But the CBOE’s rating notch lower at Baa1, with the positive outlook. Moreover, the positive outlook also indicates that a rating upgrade could be valuable for CBOE Global market if it continues on a steady course. Massih commented:

“The price volatility of Bitcoin presents risk management challenges for CCPs which makes it more difficult to close out a defaulting clearing member’s exposures. To manage this risk, both CME and Cboe set relatively high margins for Bitcoin futures trades to mitigate counterparty exposure, and have increased margin requirements from those they first presented to regulators in October 2017.”

About Bitcoin Future trading Margins 

A broker requires at least 10% more margin from its clients, more than the margin needed by clearinghouse from the broker. Both of the exchanges use different methodologies to determine the reference rate for Bitcoin futures. Also, they depend on price revelation on newly established cryptocurrency exchanges that have needed regulatory overlooking.

In any case, there is the matter of operational risk, which is acquainted with the fundamental price of future contracts because of the utilization of cryptocurrency spot exchanges.

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