In a growing sign of acceptance by regulators and Wall Street, CME Inc has indicated intentions to begin trades in bitcoin futures by year end. The company’s position is a 360 turn around from an earlier statement made a month ago, that it was unlikely to implement such trades anytime soon. The platform is however subject to the approval of the Commodity Futures Trading Commission (CFTC).
CME Group Inc. (Chicago Mercantile Exchange & Chicago Board of Trade) is an American financial market company operating the world’s largest options and futures exchange. It owns and operates large derivatives and futures exchanges in Chicago, New York City, and exchange facilities in London, using online trading platforms. It also owns the Dow Jones stock and financial indexes, and CME Clearing Services, which provides settlement and clearing of exchange trades
Why the about turn ?
The company, gave increasing demand from clients as the reason behind the move. Bitcoin prices are up by over 500% this year and are currently trading at over $7000
What are bitcoin futures ?
Bitcoin futures are simply contracts to buy or sell bitcoin at a particular price or quantity on a specified date. Futures are a way of hedging, with the expectation that the price will go up or down before the appointed date.
Why trading of bitcoin futures is a big deal
Creating an official futures market for bitcoin will lead to an inflow of funds ffrom hedge funds and investment banks. Unlike most financial markets, bitcoin trades all through the day and has huge price swings, hence the interest of big ticket firms. On the flip side, it will also bring about more transparency and regulation, in bitcoin markets.
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