Micro BTC Futures Launch in May

CME Group has announced the expansion of its suite of crypto derivatives. Although it is still pending regulatory review, CME aims to serve a wider market with its new Micro Bitcoin futures contract which will be launched on May 3, 2021.

By
Rebecca Asseh
on
April 7, 2021
Category:
Breaking News

Traditional Derivatives Meet Crypto

In a bid to serve a broader market margin, the world's leading and most diverse derivatives marketplace, CME Group, has announced the expansion of its suite of crypto derivatives. Although it is still pending regulatory review, CME aims to serve a wider market with its new Micro Bitcoin futures contract which will be launched on May 3, 2021. Unlike CME’s other contracts that equal 5 Bitcoins, the new contract is a micro bitcoin futures product and it represents 0.1 bitcoin (one-tenth of a bitcoin). Since the new contract is smaller-sized, it will cater to the needs of both institutions and individuals alike. The new contracts will retain all the features and benefits of the standard CME Group. The introduction of futures present additional tools to help investors efficiently hedge their spot bitcoin risk or execute bitcoin trading strategies. 

Cash will be the basis of settlement for the new contract and it will be based on the CME CF Bitcoin Reference Rate, which is the current reference rate for CME’s Bitcoin futures contracts. CME also announced that the micro bitcoin futures will join the previous offers of CME BTC and ETH contracts as long as it is approved by regulators. According to the derivatives group, they trade about 69,000 worth of bitcoin contracts traded daily while 38,400 worth of ether contracts have been traded since the launch of the ETH product. 

Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products acknowledged that the new contracts were in response to the demand for contracts to service a broader range of clients. He explained, "Since the launch of our Bitcoin futures contract in 2017, we have seen steady, ongoing growth of liquidity and market participation in our crypto derivatives, especially among institutional traders." CME Group had moved up the ranks to become the biggest bitcoin futures exchange in the second half of 2020. However, it seemed to have dropped in ranks to the fourth position. 


Retail Involvement

Before the launch of the mini futures, CME clients had been mostly institutions, however, new demography is opening up for derivatives trading with CME. The derivatives marketplace offers futures and options on futures trading through its platform CME Globex® platform. Other services offered are fixed-income trading through BrokerTec, foreign exchange trading on the EBS platform, optimization and reconciliation services on TriOptima, and trade processing services via Traiana. Futures are regulated by Commodity Futures Trading Commission (CFTC), they are a standardized legal agreement to sell or buy a particular asset at a predetermined price sometime in the future. By the time the regulatory review of CME mini-contracts is done and hopefully approved, we hope to see an influx of a new set of investors into bitcoin futures. 


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Rebecca Asseh

Rebecca Asseh is a crypto and blockchain Writer with an interest in emerging technologies and financial psychology. When she's not writing, she's watching medical and crime shows.