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CBOE Completes Upgrade, Other Crypto Futures Coming?

Last Updated March 4, 2021 5:05 PM
Jake Sylvestre
Last Updated March 4, 2021 5:05 PM

When the Commodity Futures and Trading Commission announced that two major exchanges could begin to offer bitcoin futures to investors, people in the crypto community heralded it as a triumphant day.

This decision was announced on December 1, 2017, and the price of Bitcoin rose 13% on this news. It was seen as a significant move into more mainstream finance for cryptocurrencies. For the first time, they were being acknowledged in a significant way by a leading government agency.

Both CBOE Global Markets Inc and CME Group were given the go-ahead to start offering these futures, which allow institutional investors to get involved with bitcoin in a much easier and more significant manner.

While the performance of these futures to date has been mixed due to volatile bitcoin prices since the turn of the year, it now appears that other cryptocurrencies will soon have their own futures contracts available for trade.

The Rumors

CBOE Global Markets Inc made a statement on Tuesday informing the public that they have completed a technology upgrade for their futures exchange over this past weekend.

On January 17 the company’s President Chris Concannon admitted  that it is a sensible idea to eventually have derivatives for a variety of digital currencies, but his company’s exchange would not be in a position to launch these futures until their system’s software had been updated. Now that this has been completed, there is nothing standing in their way of a variety of instruments on the entire spectrum of cryptocurrencies.

First Cryptocurrencies in Line?

While Concannon did not go into detail about what cryptocurrencies CBOE would be focusing on initially, there has been a lot of speculation doing the rounds in the crypto community.

Bitcoin currently sits at the top of the crypto mountain  with $178 billion worth being in circulation. There are an additional four digital currencies that exceed a market cap of $10 billion and they are Ethereum, Ripple, Bitcoin Cash and Litecoin.

It would make sense that one or more of these higher market cap tokens would be high on the list of priorities for a derivate launch by CBOE.

The Upgrades

There was significant work done on the CBOE Futures Exchange, including a latency reduction exceeding 80%. Transaction speed is extremely important for traders as a delay of even a couple seconds can have dramatic effects on the outcome of a trade.

They have also made improvements to the order-by-order data feed, bandwidth thresholds, self-trade prevention, risk controls and complex spread order handling.

People are wondering if CBOE’s competitor with bitcoin futures, CME Group will be following their lead and looking to launch futures for other cryptocurrencies. The CME Group seems to be taking a more cautious approach to expansion and will most likely watch to see what happens with CBOE’s new offerings to see how they perform before making a firm decision.

Featured image from Shutterstock.