CME Group to Gauge Client Interest for Ethereum Futures Contracts

Francisco Memoria
  • Chicago-based CME Group recently revealed it's looking to understand whether or not there's demand for an Ethereum futures product.
  • The exchange already trades Bitcoin futures contracts, and revealed there's "clearr demand" for physically settled contracts.

The Chicago-based derivatives trading exchange CME Group has recently revealed it’s planning on gauging user interest for an Ethereum futures product it could launch in the future, after launching a price index and benchmark for the world’s second-largest cryptocurrency.

According to Bloomberg, on the sidelines of an industry conference in New York, the exchange’s head of equity products Tim McCourt revealed that the company is looking to understand whether there’s user demand for such a product, although “there are no plans at the exchange to launch one currently.”

The company has recently unveiled its new Ether-Dollar Reference Rate, along with its Ether-Dollar Real Time Index, both calculated by UK cryptocurrency trading platform Crypto Facilities, which uses transactions and order book activity from Kraken and Bitstamp for the indexes. As covered, Crypto Facilities has already launched Ethereum futures contracts.

According to CryptoCompare data bitcoin, the flagship cryptocurrency, fell from a mid-December all-time high of over $19,200 to a low of about $6,800 this year. At press time, the cryptocurrency is trading at $8,315.

CME dismissed that Bitcoin futures trading by both CME and Cboe Global Markets was responsible for the cryptocurrency market decline, as McCourt claimed the trading volume was too small for that to be the case. He said:

“If you look at the notional that trades, it’s tough to say that futures were responsible for that selloff given the relatively small percentage contribution to Bitcoin trading.”

Tim McCourt

McCourt further revealed that CME found there was “clear demand” for physically-settled Bitcoin futures, in addition to CME and Cboe’s cash-settled contracts. Being physically settled means these would be delivered in the asset being traded, which in this case would be Bitcoin.

The CME representative claimed that the market’s infrastructure for institutional trading of such a contract isn’t there yet. He stated:

“With physical delivery you have to figure out what to do with the Bitcoin; are you going the custody route, are you going the private key route, those are very interesting questions and we’re looking forward to some of those solutions availing themselves in the market, but right now the community is best served by a financial contract.”

Tim McCourt

While these exchanges analyze the possibility, UK-based crypto exchange Coinfloor has earlier this year revealed it was set to offer physically settled bitcoin futures contracts.

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