CME traders prefer cash-settled Bitcoin products


Tim McCourt, head of the Chicago Mercantile Exchange’s (CME) alternative investment products and stock index, said traders prefer Bitcoin cash trading to physical Bitcoin-backed (BTC) products.

„So far, customers have expressed a clear preference and priority for a cash-settled product,“ McCourt told Cointelegraph in an email when asked why CME chose the cash settlement route for its Bitcoin futures trading product in 2017.

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CME launched its BTC futures after its price measurement
The WEC opened Bitcoin futures trading in 2017, based on the exchange’s own Bitcoin Reference Rate (BBR) CF and the Bitcoin Real Time Index (RTI) published in 2016. Essentially, these two metrics show the average trading price of Bitcoin on several major exchanges at various times, an effort to give the industry a clearer price for the asset, McCourt said.

With CME’s Bitcoin futures product backed by cash, customers can trade the Bitcoin price share without owning the asset itself, McCourt explained, adding:

CME’s cash settlement mechanism is based on prices determined on various BTC exchanges, much like the S&P 500 settlement mechanism is based on prices determined on centralized auction markets.
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Customer interest spurred the launch of CME’s cash-settled

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futures product as cryptosystems gained notoriety. There was a lot of interest from customers and the crypto community in futures to hedge risk or to be exposed to Bitcoin pricing,“ said McCourt.

„The introduction of CME’s Bitcoin futures created a forward curve for investors to better manage that price risk,“ he added, referring to the tactics and strategies that traders and investors often use to manage their funds.

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McCourt recalls the pleasant experience of opening CME’s Bitcoin futures product, the first of its kind in crypto space, apart from a similar offer launched by the Chicago Board Options Exchange, or CBOE, in 2017. CME’s Bitcoin futures continue to have significant volume, with an average of approximately 42,500 BTCs traded per day, said the head of CME.

CME recently posted a number of registrations for its Bitcoin futures and options trading products, showing that the public is anything but disinterested in the exchange’s products.

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