CME Group Changes Ether Reference Rate & Index, Insiders Predict Futures Coming

  • CME Group announces an update to its ether reference rate and ether-dollar index. 
  • Insiders anticipate the firm to start offering ether futures.

Insiders are betting on the possibility of ether futures after the CME Group announced a change to its reference rate and index tied to ether. 

CME Updating Ether Tools

The CME Group, which is the world’s leading and most diverse derivatives marketplace, has been a contributor to cryptoasset speculation by allowing the option of trading bitcoin futures. In a notice released on Friday, July 5, the firm stated it would be updating its reference rate and index tied to ether. 

While CME Group has yet to launch ether futures trading, the firm has operated a reference rate and ether-USD index since 2018. Now the group will be introducing itBit, the exchange unit of New York-based Paxos, to provide data on the two financial tools in conjunction with Bitstamp and Kraken. 

Both indexes will continue to be administered by Crypto Facilities, which was acquired by cryptocurrency exchange Kraken in February in a reported nine-figure deal. Crypto Facilities is regulated by the Financial Conduct Authority (FCA) in the UK. 

Ether Futures on the Horizon

In the release, CME Group stated that itBit had satisfied its criteria to be a participant in the indexes. However, industry insiders are now predicting the update to be in preparation of offering ether futures. Ethereum is the second-largest cryptocurrency by market capitalization and would pair well with what CME Group offers traders with bitcoin. 

Speaking with The Block, one industry source said, 

“I think this is prep for an Ether future. They have to improve the robustness of their index.”

Compared to crypto exchanges, which offer real-time buy/sell trading, settling derivatives can be a more complex process. Traders rely upon exact data to represent the price of the asset, and a poorly operated index can lead to market manipulation. 

The source continued, 

“It’s the implicit limitation of CME’s cash settled futures--always need market data from spot exchanges.”

According to The Block, CME declined to comment on the possibility of ether futures and instead said they were solely focused on updating the index and reference rate. 

CME bitcoin futures have continued to set records in volume trading throughout 2019, with new clients up 30 percent since the start of the year. It’s unlikely that the firm will continue to sit on the sideline for ether futures once they have the capability.