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CME Group Says It’s Gauging Client Interest on Ethereum Futures After Index Launch

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by Polina Chernykh · 3 min read
CME Group Says It’s Gauging Client Interest on Ethereum Futures After Index Launch
Photo: tiendientu vietnam / Flickr

The US-based derivatives marketplace is planning to estimate user demand for ethereum futures product prior to its future launch on the platform.

The exchange operator, CME Group, has unveiled it is now going to review customer demand for ethereum futures contracts, following the launch of a daily benchmark value and a pricing index for ether.

The tracking prices for the second largest digital currency were published by the exchange on Monday. They are based on data gathered from leading crypto platforms Kraken and Bitstamp and are calculated by the UK cryptocurrency derivatives exchange Crypto Facilities.

According to Tim McCourt, CME’s head of equity products, the company wants to see whether there is enough client interest to launch the new product and doesn’t have exact plans yet.

“We’ll continue to gauge with them to ascertain the demand for futures,” McCourt told Bloomberg during an interview at an industry conference in New York. “There are no plans at the exchange to launch one currently,” he added.

The exchange, McCourt noted, has detected there is obvious customer demand for physically-settled bitcoin futures contracts, as well as for the cash-settled ones offered by CME Group and CBOE.

“There’s a clear demand for it in the market; people would welcome that innovation,” McCourt said. “With physical delivery you have to figure out what to do with the Bitcoin; are you going the custody route, are you going the private key route, those are very interesting questions and we’re looking forward to some of those solutions availing themselves in the market, but right now the community is best served by a financial contract.”

CME Group launched bitcoin futures product in December, 2017, a year after creating a bitcoin price index and a reference rate. Although the demand for the product had been lower than some anticipated, the exchange expects the growth of the trading volume of ethereum futures this time.

As McCourt noted, he doesn’t attribute the cryptocurrency decrease to the CME and CBOE’s bitcoin futures offering, noting the trading volume was too small to trigger the decline. “If you look at the notional that trades, it’s tough to say that futures were responsible for that selloff given the relatively small percentage contribution to Bitcoin trading,” he said.

Just a few days ago, another cryptocurrency trading platform Crypto Facilities started offering ethereum futures contracts currently regulated by the Financial Conduct Authority (FCA). With a new tool, investors will be able to broaden investment opportunities, effectively manage their risks and contributing to the market liquidity. The exchange already offers its customers the ability to trade futures for Bitcoin and trade Ripple’s XRP tokens.

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