Less than three months have passed since the first Bitcoin futures contracts exchanges hands on a regulated US exchange, but one industry veteran says that his clients are already clamoring for more cryptocurrency derivatives.
Bitcoin Futures the Beginning of a New Derivatives Class: Wedbush Securities Director
Bob Fitzsimmons, who spent decades in the trading pits and now serves as managing director of Wedbush Securities’ futures division, told MarketWatch that his institutional clients don’t just want to trade Bitcoin futures — they also desire exposure to large-cap altcoins.
“Clients are asking, ‘when is Litecoin, when is Ripple,’” Fitzsimmons said in a phone interview, adding that the new product class does not feel like a passing fad.
“The launch reminds me of the U.S. Treasury market in the 1970s,” he continued. “Back then the prototypical floor guy was an Ivy League athlete. Today it’s a quant guy with his own algorithm that can beat the market.”
As CCN.com reported, the first regulated US Bitcoin futures contracts launched in December, first on CBOE and later on CME. Volume has remained thin relative to the global spot markets, but the futures markets have been orderly and have cycled through several contract expirations without major incident.
CBOE Prepares to Roll Out More Cryptocurrency Derivatives
CBOE executives have not been shy about their desire to roll out more cryptocurrency futures, which they see as an opportunity to increase their share of the derivatives market. The exchange operator had said that it wanted to upgrade its trading software before it launched further cryptocurrency derivatives products, and it announced on Tuesday that it had completed this process.
Meanwhile, other major exchange operators, including Nasdaq, are reportedly planning to list their own Bitcoin futures products. Nasdaq CEO Adena Friedman said in January that the exchange’s plans are still in the “exploratory phase” and that it desires to structure its Bitcoin futures product so that it is “more of an investment” than the ones currently available on CBOE and CME.
However, some institutional firms have expressed reservations about the development of cryptocurrency futures products, and — responding to these critics — the Commodity Futures Trading Commission (CFTC) has said that it will implement a “heightened review” process for new cryptocurrency derivatives products moving forward.
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Last modified: March 4, 2021 5:06 PM