While the news about CME Group launching options for its Bitcoin futures contracts has been making rounds for the last few, it has now been confirmed officially. The derivatives platform said that it will launch Bitcoin options in January 2020. The official announcement reads:
“In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME Group will launch options on Bitcoin futures (BTC) on January 13, 2020”.
Tim McCourt, the exchange’s global head of equity index and alternative investment products, said:
“Since the launch of our Bitcoin futures nearly two years ago, clients have expressed a growing interest in options as another way to hedge and trade in these markets. We have worked closely with clients and the industry to establish a robust and increasingly liquid underlying futures market here at CME Group, and we believe Bitcoin options will now offer our customers greater precision and flexibility to manage their risk.”
Addressing Regulatory Requirements
The CME Group said that its options project is still under regulatory consideration. However, the company looks confident that it will make through the regulatory requirements. Besides, the company has clarified that its one Bitcoin futures contract will consist of 5 BTC quoted in USD. The announcement further reads:
“Option exercise results in a position in the underlying cash-settled futures contract. In-the-money options are automatically exercised into expiring cash-settled futures, which settle to the CME CF Bitcoin Reference Rate (BRR) at 4:00 p.m. London time on the last Friday of the contract month.”
In the last few months, the CME Group has seen a massive demand for its Bitcoin futures contracts. The derivates exchange said that it has got an average daily volume of 6500 contracts so far in 2019. Currently, there are over 3500 registered accounts on the platform and CME says that half of its volumes come from outside the U.S.
However, CME Group has a strong competitor in the market which is the ICE‘s Bakkt platform. After launching its Bitcoin futures contracts in September 2019, Bakkt has seen considerable growth in the market just in two month’s time.
Just like CME, Bakkt too is eyeing its share for the Bitcoin options contracts in the market. Citing massive open interest in the market Bakkt has accelerated its plans of launching Bitcoin options. Bakkt recently announced that it will launch its Bitcoin options contract in the next month of December 2019. Thus, as the market gets competitive we can see more institutional participation in the coming days.
