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Federal regulator gives OK for bitcoin futures to trade

05 December, 2017, 02:12 | Author: Paula Vaughn
  • Bitcoin logos are displayed at the Inside Bitcoins conference and trade show in New York in April 2014

The futures will be launched under Cboe Futures Exchange (CFE) under the ticker "XBT". Monday, December 11, will be the first full day of trading, and trading will be free through December.

CME Group has listed a bitcoin futures contract, to start on 18 December. Its price has jumped more than tenfold this year.

Bitcoin's price levels have mostly displayed incremental gains within the $11,000 price range.

CME, which owns various derivative trading platforms such as the Chicago Mercantile Exchange, said in a statement on Friday that there will be risk-management measures in place as bitcoin is a "new, uncharted market".

On the US -based Bitfinex exchange, fell to $11,131, down $31, or 0.28% after hitting an all-time high of $11,843 earlier in the session. "To promote this, we will initially offer XBT futures trading for free".

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CME Group's Bitcoin futures will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the USA dollar price of bitcoin.

Cboe and CME got approval from the USA derivatives regulator to list bitcoin futures on Friday, after the rival bourses were able to show that their proposed contracts and trading arrangements met the necessary regulatory requirements.

On the other hand, CME plans to use the services of four bitcoin exchanges - Bitstamp, GDAX, itBit and Kraken - to set its Bitcoin Reference Rate (BRR). But there are a couple of differences between bitcoin futures trading at the two exchanges.

However, despite the cash-settlement process, some institutional investors have expressed concern at the addition of bitcoin-derived products to CME. To ensure minimal impact on markets due to bitcoin's price swings, traders will have to pay 33 percent of their trade's price upfront as compared to the 35 percent for CME bitcoin futures trades.

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