CME Group Sees Increasing Institutional Demand for Bitcoin Contracts

US-based derivatives Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term CME Group revealed that it is recording increasing institutional interest as the launch of its Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term options is looming, Markets Media reported on Thursday.

The Chicago-based exchange is one of the major issuers of Bitcoin futures in the United States market and is now planning to introduce options on Bitcoin futures contracts in the first quarter of next year. The proposal is still pending for regulatory review.

Get ready for options on #Bitcoin futures, launching in Q1 2020 from CME Group. Find out more: https://t.co/rdo6RbsetE pic.twitter.com/YLhIZo2h6v

— CMEGroup (@CMEGroup) September 20, 2019

The exchange is currently testing the options instrument, which is based on CME Group’s existing technology, matching engine, and clearing mechanisms.

“Since we launched bitcoin futures in December 2017, the number one demand from customers has been for options on our futures,” Tim McCourt, global head of equity index and alternative investment products at CME, told the media house.

He also detailed that the institutional players interested in the digital asset instruments include hedge funds, CTAs, and asset managers.

“The institutional interest in bitcoin is growing but they need time to become familiar with the market and get approval to use new products,” McCourt added.

No plans for physically-settled Bitcoin contracts

Addressing the hype over physically-settled Bitcoin futures contracts, he said that CME Group has no plans to launch such contracts.

Unlike CME’s cash-settled Bitcoin futures, physically-settled instruments deliver the number of Bitcoins associated with the contract, minimizing the settlement risks.

Bakkt became the latest player in the United States market to first introduce such physically-settled futures contracts. However, the demand for such contracts remains much lower than the expected trading volume.

“Building a new futures market is hard and we have been hugely successful with $1.3bn (€1.19bn) of bitcoin futures traded in May,” he added. “We have already delivered on milestones and the introduction of options will help develop the ecosystem.”