The CME Group is putting forward an initiative to publish Bitcoin prices as both a real time spot price index and a reference rate by traders, investors, and the public. This is the first time that a large asset exchange implements such a measure. Hopefully, the initiative will contribute to bitcoin legitimization as a financial asset.
The CME informs on its website that the CME CF Bitcoin Reference Rate (BRR) and the CME CF Bitcoin Real Time Index (BRTI) will be a standardized reference rate and spot price index with independent oversight. These tools are expected to boost the professionalization of bitcoin trading and hereafter establish digital assets as a new asset class.
The pricing data will be provided by such leading bitcoin exchanges and trading platforms as Bitfinex, Bitstamp, GDAX, itBit, Kraken and OKCoin.com.
“An independent, transparent bitcoin reference rate will further professionalize the asset class. We are excited to be a participating exchange”, Nejc Kodric, CEO at Bitstamp, says.
The CME Group explains: “The BRR aggregates the trade flow of these exchanges during a specific calculation window into a once-a-day reference rate of the U.S. dollar price of bitcoin. Calculation rules are geared toward a maximum of transparency and real-time replicability in underlying spot markets. Meanwhile, the BRTI is an index that aggregates global demand to buy and sell bitcoin into a consolidated order book and reflects the fair, instantaneous U.S. dollar price of bitcoin. It is geared toward low latency and timeliness and is based entirely on forward-looking input data.”
“Digital currency has long-needed participation from a company such as CME Group to elevate the asset class to a new level. We are thrilled to be a member of the oversight committee,” said Michael Moro, CEO of Genesis Global Trading.
The BRR and BRTI will officially launch November 14th, in the production environment on Simple Binary Encoding (SBE) market data feed.
Last year, CME Group partnered with some other financial institutions such as the London Stock Exchange, Euroclear, Societe Generale, Swiss bank UBS, and clearing house LCH.Clearnet, to establish a body that will investigate the potential applications of the blockchain in the payments industry. The aim of the team called ‘Post Trade Distributed Ledger Working Group’ was to explore how the technology may transform the way of conducting transactions.
“Our view is the technology needs to be developed in a considered and rigorous manner, in partnership with clients, to provide the right service and benefit to them. Given our long experience in post-trade, our group has significant technical expertise to bring to the discussion,” the London Stock Exchange, one of the partners, said.