CME Group goes live with micro ether (ETH) futures

abdelaziz Fathi

CME Group, the world’s largest derivatives marketplace, announced Tuesday the launch of its second micro cryptocurrency product.

Ethereum

Roughly nine months after the launch of its first Ether derivative product, CME Group is bringing another level of diversification to cryptocurrency traders with a micro Ether futures contract.

Closely tied to its older brother, the smaller-sized contract is based on the same underlying reference index, the CME CF Ether-Dollar Reference Rate, and is settled in cash. The micro Ether futures will be priced off at that index which was developed in partnership with Crypto Facilities to provide real-time ether price in dollars. The index references pricing data using transactions and order book activity from several cryptocurrency exchanges, currently made up of Kraken and Bitstamp.

The micro contract will have just 1/10 of the notional value of the original contract. CME’s mini futures on the No.2 cryptocurrency has been reviewed by regulators, and the exchange operator today confirms the addition was cleared and will be available for purchase.

Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products, comments:

“The launch of Micro Ether futures underscores the significant growth and liquidity we have seen in our cryptocurrency futures and options. Sized at one-tenth of one Ether, Micro Ether futures will provide an efficient, cost-effective way for a range of market participants – from institutions to sophisticated, active, individual traders – to hedge their spot Ether price risk or more nimbly execute Ether trading strategies, all while retaining the features and benefits of CME Group’s larger-sized Ether futures.”

Call it a major move

Chicago-based CME said the move marks a new development in the nascent crypto futures market that will give new access to retail investors, either those looking to branch into different markets or struggling to participate due to limited capitalization.

One-tenth of the size of standard contracts is introducing professional traders to many benefits when trading these limited-risk contracts.

Surging prices led to a jump in open interest and trading volume for CME’s ether futures as investors sought to hedge their positions in the spot market by opening futures positions at the exchange.

Furthermore, the mini ETH derivatives come barely five months after the launch of micro Bitcoin futures, which was the latest move by the world’s largest futures exchange operator to expand into the crypto business.

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