CME says 12/18 will be start date. CBOE to follow soon after. The CME Group booth offering bitcoin talk at a digital-asset investor event in New York on Tuesday. Photo: Michael Nagle/Bloomberg News By Alexander Osipovich Updated Dec. 1, 2017 3:43 p.m. ET 27 COMMENTS The U.S. Commodity Futures Trading Commission said it would allow two major Chicago exchanges to launch bitcoin futures. The Friday announcement paves the way for the start of bitcoin futures on CME Group Inc. and Cboe Global Markets Inc. in the coming weeks—a potentially huge step in the evolution of the digital currency, making trading bitcoin easier for Wall Street banks and small investors alike. CME said its bitcoin futures would launch Dec. 18. Cboe said it would shortly announce the start date for its new bitcoin contract. After “extensive discussions” in recent weeks, the two exchanges made significant changes to their proposals at the regulator’s request, the CFTC said. Bitcoin Price Mania: An ATM Adventure Bitcoin's price has risen more than 900% this year, but it's seen wild fluctuations ranging from 44% up or 25% down against the dollar. The WSJ’s Thomas Di Fonzo visits New York City's bitcoin ATMs to demonstrate just how volatile the virtual currency can be in just a day. Photo: Alexander Hotz / The Wall Street Journal Those included steps to reduce the risk of market manipulation. The agency said it expects CME and Cboe to closely monitor trading in their partner bitcoin exchanges, and to assist the CFTC in surveillance of those marketplaces. Still, CFTC Chairman J. Christopher Giancarlo warned investors of bitcoin’s notorious volatility. “Market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority,” he said in a statement. “There are concerns about the price volatility and trading practices of participants in these markets.” CME and Cboe used “self-certification,” declaring to the CFTC that the new contracts are in accordance with relevant laws and regulations. The agency has the power to block a self-certified contract, but otherwise it goes forward. More on Bitcoin Bitcoin Mania: Even Grandma Wants In on the Action Fed Official Steps Up Concern Over Bitcoin Bitcoin Exchanges Struggle to Handle Record Volume Nasdaq Plans to Launch Bitcoin Futures in First Half 2018 Small Investors Latch On for Bitcoin’s Wild Ride Bitcoin: Everything You Need to Know Both exchanges self-certified their bitcoin futures on Friday. Under agency rules, that means trading could start as soon as Monday. Bitcoin futures would allow traders to bet the price of the digital currency will rise or fall, as they can with commodities such as oil, corn and gold. Market proponents argue that this could reduce volatility in the underlying market, by allowing an easy way to “short” bitcoin—that is, bet its price will fall. Futures would also allow Wall Street banks and other big financial players to hedge against a price collapse. Bitcoin futures could also clear the way for the eventual launch of an exchange-traded fund tied to the digital currency. In March, the Securities and Exchange Commission rejected a bid to list the first bitcoin ETF on a U.S. exchange, in part due to concerns that the underlying markets weren’t sufficiently regulated. But it could soon be possible to create an ETF based on bitcoin futures, in the same way that oil ETFs hold oil futures rather than actual barrels of crude. Soaring Bitcoin: If It's a Bubble, When Will it Burst? Investment manias throughout the centuries have ranged from tulips to tech stocks to housing; is bitcoin different? Image/Video: Daniel Epstein “It’s a very helpful step in the formation of an ETF on bitcoin,” said Chris Concannon, president and chief operating officer of Cboe. The CFTC also said on Friday that the tiny Cantor Exchange had self-certified a bitcoin binary option—a derivative that offers a different way to be on bitcoin prices. The exchange is owned by Cantor Fitzgerald LP, a prominent brokerage and investment-banking group. The Wall Street Journal first reported on Cantor’s plans Wednesday. Invented less than a decade ago, bitcoin has attracted intense investor interest this year, largely because of an extraordinary price surge. It cracked the $10,000 mark Tuesday, after having started the year at $968.23, according to CoinDesk. But skeptics call it a bubble, and bitcoin remains tarnished by its lingering association with money laundering and other illicit activity. The “cash exchanges” where bitcoin is traded—not to be confused with futures exchanges like CME—have also suffered repeated hacks, outages and flash crashes. The CFTC said CME agreed to tighten a key requirement for its bitcoin futures, reining in the ability of traders to magnify their wins or losses. To buy or sell futures, traders must open a “margin” account with their brokerage and put down cash to partly cover the value of the contracts. Initially, CME had floated a minimum margin requirement of 25% to 30%. But on Friday CME said it was hiking that to 35%--a move that could dial back some of the riskiness of trading bitcoin futures. CME is the world’s largest exchange company, with a market capitalization of more than $50 billion. Its announcement in October that it would aim to introduce bitcoin futures was a major vote of confidence in the digital currency. After that announcement came out, CME “fielded hundreds of calls and emails” from various customers interested in trading bitcoin futures, it said in a regulatory filing on Friday.
ie margin requirement per contract = 35% of 5 * $10k = $17 500 ie leverage of only 50k/17.5k = 2.8 only?!??!! by contrast, gold margin requirement is $5k, mini dax 5k eur, dax 24k eur. because BTC movement is going to be very violent, if you can't profit from trading hangseng index, heating oil, RB gasoline, very unlikely you can earn money trading BTC.
Personally I can't see why CBOE is even bothering if CME is involved but we'll see. Here's the CBOE spec: http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures/contract-specifications Some interesting stuff: No market orders allowed, period. Reportable level of 5 contracts vs 1 contract for CME (I'm assuming this will affect COT data). Seems to be based off of the "Gemini auction price for bitcoin" whereas CME is based off their own index (aka the BRR, which is a quorum of other exchanges [for now atleast, heh]) Provides weekly futures (which I think are dumb in general and should just go away). 10$ tick value (CBOE) vs 25$ tick value (CME), (I don't know about the per exchange fees). 10.00 min tick (CBOE) vs 5.00 min tick (CME). 1 BTC (CBOE) vs 5 BTC (CME). Update: according to this: https://www.cboe.com/publish/cfefeeschedule/cfefeeschedule.pdf Plus the SER document (SER-8051.pdf) @ajacobson posted: Fees for CBOE XBT futures are 0.50$ per side (seems pretty low?), whereas CME is 5.00$/side (seems pretty high?). So CME is 2x the fees for an equivalent contract size?
considered as quite tame compare with CME heating oil and RB gasoline. Bitcoin will be more violent than HO and RB
No market order means the exchange accepts only limit order? wonder if the exchange accepts stop order. Some exchanges do not accept stop order for certain financial instruments. So traders have to glue themselves to the chair and monitor.
It's right there in the spec: Market Orders for XBT futures contracts will not be accepted. Any Market Orders for XBT futures contracts received by the Exchange will be automatically rejected. Stop Limit Orders are permitted during regular and extended trading hours for the XBT futures contract.
You might get some brokers offering 50% or 25% of exchange margin for intra day, so between 4 and 8K for day traders. But knowing IB they will probably do the opposite and want 100% margin at all times, and something like 500% for short positions.
Yes, but with BTC you only have to go long. I don't get why they did the 5 coins multiplier. After all their commission is per contract, so if they make it 1 coin per contract, their commission would be 5 times more for the same capital traded. Maybe they wanted to lock out the small fish...