CME Group Unveils Plans of Launching Ether/Bitcoin Ratio Futures

On Thursday, June 29, the world’s leading derivatives platform CME Group announced plans to launch the ether/bitcoin (ETH/BTC) ratio futures subject to approval from the regulators.

These futures will be cash-settled meaning that the settlement will happen in cash instead of the underlying instrument. Also, the settlement will happen to the value of the CME Group Ether futures final settlement price, divided by the corresponding CME Group Bitcoin futures final settlement price.

The ETH/BTC ratio futures will follow the same settlement cycle as that of the CME Group Bitcoin futures and Ether futures contracts. Speaking of the development, Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products said:

“Historically, ether and bitcoin have been highly correlated; however, as the two assets have grown over time, market dynamics may affect the performance of one more than the other, creating relative value trading opportunities. With the addition of Ether/Bitcoin Ratio futures, investors will be able to capture ether and bitcoin exposure in a single trade, without needing to take a directional view. This new contract will help create opportunities for a broad array of clients looking to hedge positions or execute other trading strategies, all in an efficient, cost-effective manner.”

Major Advantage of Ether/Bitcoin Ratio Futures

The introduction of Ether/Bitcoin Ratio futures (EBR) enables traders to efficiently engage in relative value trading between Ether futures (ETH) and Bitcoin futures (BTC) contracts within a single trade. This innovative contract provides investors with an opportunity to gain exposure to cryptocurrencies without requiring a specific directional bias.

Ether/Bitcoin Ratio futures offer traders a convenient means to express their perspective on the relative value of the two cryptocurrencies, regardless of their overall cryptocurrency market outlook. The ratio futures are denoted by the ticker EBR on CME Globex, with the ratio being defined as the price of Ether futures divided by the price of Bitcoin futures.

The EBR Final Settlement price is determined by dividing the Final Settlement Price of Ether futures by the Final Settlement Price of Bitcoin futures. The ratio is calculated using the same expiration month for both the underlying Ether and Bitcoin futures contracts. The ratio is always positive and is available for all listed contract months. The contract’s notional value is derived by multiplying the ratio by $1,000,000.

Crypto industry players have lauded this move from the CME Group stating that it will bring more liquidity into the markets.