Home / Headlines / Derivatives Leader CME Announces Bitcoin Benchmark Rates; NYSE to Follow
3 min read

Derivatives Leader CME Announces Bitcoin Benchmark Rates; NYSE to Follow

Last Updated March 4, 2021 4:48 PM
Samburaj Das
Last Updated March 4, 2021 4:48 PM

In a major move that is undoubtedly going to benefit and bring credibility to bitcoin and digital currencies, derivatives giant CME Group has announced the launch of two bitcoin benchmarks as its newest products. CME Group’s rival ICE (Intercontinental Exchange Inc) which owns the New York Stock Exchange, will also launch a real-time price index for bitcoin price.  

Described by The Economist  as “the biggest financial exchange you’ve never heard of,” Chicago-based CME (Chicago Mercantile Exchange) Group owns and operates some of the largest derivatives and futures exchanges in multiple cities across the United States.

In an announcement  today, the CME Group unveiled two bitcoin benchmarks for traders and investors by collaborating with digital assets trading platform Crypto Facilities (CF) Ltd.

Altogether, six bitcoin exchanges and trading platforms will provide the pricing data which will help gauge the reference prices. They are Bitfinex, BitStamp, Coinbase, Genesis Global Trading, itBit and Kraken.

In a statement, executive director at CME Group, Sandra Ro said:

These products are designed to allow bitcoin traders, companies and other users to rely on a credible reference rate price source.

The Bitcoin Benchmarks

The first benchmark will be called the CME CF Bitcoin Reference Rate (BRR), a figure that will represent the final settlement price of BTC in USD at 4 PM London Time on each trading day. The BRR will be an aggregate of the trade flow of the above-mentioned bitcoin spot exchanges during a specific calculation window, seen as a once-a-day, transparent BTC reference rate to its USD value.

A newly created oversight committee with CME Group, Crypto Facilities and Imperial College London as core members will be responsible for overseeing the BRR. As a part of their function, the core members will develop a code of conduct for participants and will also ensure BRR’s integrity with a regular review of practices and standards followed in the BRR’s determination process.

Dr. Timo Schlaefer, CEO and Co-Founder of Crypto Facilities added:

The availability of robust reference prices with independent oversight is key to the professionalization of bitcoin trading and further establishes digital assets as a new asset class.

Fin market

The second, the CME CF Bitcoin Real Time Index (RTI) will enable investors and users with access to real-time numbers of BTC prices. Calculated by Crypto Facilities, the RTI will be calculated on the global demand to buy and sell BTC aggregated into a consolidated order group. Published approximately once every second, the RTI will represent the current market price of BTC in USD.

Prof William J.Knottenbelt of Imperial College London opined:

The Imperial College Centre for Cryptocurrency Research and Engineering (IC3RE) welcomes this important step in the further development of the use of cryptocurrency in the derivative markets.

NYSE to Display Bitcoin Price Index

As revealed by Reuters , the New York Stock Exchange (NYSE) – owned by CME Group rival ICE (Intercontinental Exchange Inc), is also evaluating the option of using data from multiple digital currency exchanges for its daily settlement price, a feature that it has published since May 2015 with data exclusively from BTC exchange Coinbase.  Dwijen Gandhi, head of indexes for the NYSE also revealed that the NYSE will soon launch a real-time BTC pricing index, a move that will “provide additional transparency and insight into the bitcoin price,” Gandhi stated.

The BRR and the RTI features are scheduled to be launched in the fourth quarter of 2016.

Featured image from Shutterstock.