Home Archive CME Dashes Hopes For Bitcoin Futures Contract, But Upbeat On Bitcoin

CME Dashes Hopes For Bitcoin Futures Contract, But Upbeat On Bitcoin

Lester Coleman
Last Updated March 4, 2021 5:00 PM

CME Group, the world’s largest futures exchange, will not be introducing bitcoin futures, a hope that emerged when the company introduced a bitcoin index last year. Bryan Durkin, president of the group, told Bloomberg Television  his company does not expect to go forward with a futures contract in the near future.

Bitcoin futures would likely bring professional market traders to cryptocurrency, a move that would bring liquidity to the market.

CBOE Holdings Inc., meanwhile, plans to introduce bitcoin futures in the near future. In August, CBOE joined Gemini Trust Co. to launch bitcoin futures. Ed Tilly, chairman and CEO of CBOE, told a Barclays conference in New York earlier this month that people want exposure to bitcoin.

Not all professional traders, however, will be on board. Jamie Dimon, CEO of JPMorgan Chase & Co., said he would fire any employee trading bitcoin.

Durkin Still Upbeat On Bitcoin

Durkin, for his part, is nonetheless upbeat about bitcoin. He told Bloomberg Television bitcoin is very nascent at present, which he credited to uncertainty in the geopolitical realm.

“I really don’t see us going forward with a futures contract in the very near future,” he said. “However, the straight through processing and capabilities associated with digitization technologies is an area of interest for us.”

The company’s bitcoin index has created more transparency from a pricing perspective, he said.

Asked how MIFID (Markets In Financial Instruments Directive, a European Union framework for financial regulation) will impact CME, Durkin said CME has already gone through the Dodd-Frank legislation in the U.S., and has been able to help clients adjust to the regulations.

“With respect to MIFD, you’re seeing the Europeans go through that transition their self,” he said. “It’s really incumbent upon us to be closely connected to our clients… and help them understand what may be changing on that horizon.”

He said Brexit continues to create uncertainty, which carries risk. He said the news about Brexit changes daily.

“We just consider building liquidity during the international time zones to make sure that as news comes out, markets and market participants are able to adapt and go to a market and be able to manage the risk,” he said.

Data Market Expands

As far as commercializing market data, Durkin said market data represents a significant line of business for CME.

“We have traditionally focused on the core data distribution,” he said. “This past year, we’ve really been turning our focus on the development of derived products. Derived products is really utilizing pricing information to develop products that are not necessarily derivatives based, but are reliant on taking price feeds from us. You’ll see more on the horizon in terms of derived data, and also data mining of our products.”

“CME is very proud of having diverse asset classes to respond to that uncertainty… providing the tools that our clients need to manage these risks in uncertain times,” Durkin said.

CME Expands Asia Presence

While CME Group has closed its European exchange, this week it is opening its first office in Asia.

“Asia represents a tremendous area of growth for us,” he said. Out of the company’s 16 million contracts, close to 3.5 million are coming from international efforts. “Asia represents close to 700,000 of those contracts,” he said.

The company has more than 300 people in quadrants throughout Asia.