Chicago-based derivatives exchange CME Group said that it plans to gauge client interest for an ethereum futures product now that it has launched a price index and benchmark for ether, the world’s second-largest cryptocurrency.
Speaking with Bloomberg on the sidelines of an industry conference in New York, Tim McCourt, CME’s head of equity products, said that the exchange operator will test the waters to see if there is enough demand to justify the creation of an ethereum futures product, though the firm does not yet currently have plans to list contracts that track the price of ether.
“We’ll continue to gauge with them to ascertain the demand for futures,” he said. “There are no plans at the exchange to launch one currently.”
As CCN.com reported, CME on Monday unveiled its new benchmark Ether Reference Rate and Ether Real Time Index, each of which provides audited pricing data for ETH/USD trading pairs. Data is aggregated from cryptocurrency exchanges Kraken and Bitstamp and then calculated by UK cryptocurrency derivatives exchange Crypto Facilities.
McCourt further said that CME has identified a “clear demand” for physically-settled cryptocurrency futures. At present, both CME and fellow Chicago exchange CBOE offer futures contracts that are tied to the price of bitcoin but are settled in cash — not cryptocurrency — due to various custodial and regulatory concerns. “There’s a clear demand for it in the market; people would welcome that innovation,” he said, adding:
“With physical delivery you have to figure out what to do with the Bitcoin; are you going the custody route, are you going the private key route, those are very interesting questions and we’re looking forward to some of those solutions availing themselves in the market, but right now the community is best served by a financial contract.”
Elsewhere in the interview, McCourt hit back at claims that CME’s bitcoin futures product launch triggered the recent bear market. Noting that bitcoin peaked at an all-time high on Dec. 17 — the same day that CME listed bitcoin futures — researchers at the US Federal Reserve argued that the bear market was the result of traders taking up short positions in futures.
McCourt, though, said that although futures volume has grown considerably since the markets opened, it was far too small in December to be responsible for a full-fledged selloff.
“If you look at the notional that trades, it’s tough to say that futures were responsible for that selloff given the relatively small percentage contribution to Bitcoin trading,” he said.
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Last modified: June 11, 2020 10:07 AM UTC