If the regulators allow this to proceed, it will be a clear message that they have a bias toward exchanges and against the OTC sector
If there is one bizarre turn of events that has begun to take place over recent weeks, it is the sudden embracing of all things crypto by major banks, derivatives exchanges and even governments.
For the past ten years, nothing but an absolute trail of disaster, anarchy and fraud has dogged the digital currency world, however all of a sudden, major, well established venues are jumping on it.
Today is no exception as CME Group, the world’s leading and most diverse derivatives marketplace has announced that it intends to launch Ether futures starting February 8, 2021, pending regulatory review.
The new contract will be cash-settled, based on the CME CF Ether-Dollar Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of Ether. Ether futures will be listed on and subject to the rules of CME.
“Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “Ethereum is the second-largest cryptocurrency by both market capitalization and daily volume. The introduction of listed Ether futures to our time-tested, regulated CME Group derivatives marketplace will help to create a forward curve so Ethereum market participants can better manage price risk.”
Ether futures will join CME Group’s Bitcoin futures and options. As CME Bitcoin futures approach their third anniversary on Dec. 17, there has been significant growth in their adoption from a broad array of participants, including institutional investors.
In 2020-to-date, 8,560 CME Bitcoin futures contracts (equivalent to about 42,800 bitcoin) have traded on average each day. At the same time, institutional interest continues to build with the number of large open interest holders reaching a record of 110 in December.
If the regulators allow this to proceed, it will be a clear message that they have a bias toward exchanges and against the OTC sector, as these digital currency futures are very risky indeed.
Regulators know full well that CFD firms have lost a fortune on crypto pairs in the past, notably at the end of 2017 in which two well known firms lost 57 million dollars between them in the space of a week.
Clearly what is good for the goose is not good for the gander.