CME Group to launch micro Ether futures in December

abdelaziz Fathi

Roughly eight months after the launch of its first Ether derivative product, CME Group is looking to bring 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 will be 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, which is expected to debut on December 6, will have just 1/10 of the notional value of the original contract. CME’s mini futures on the No.2 cryptocurrency are currently being reviewed by regulators, and the exchange operator confirmed that once the addition clears, they will be available for purchase.

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.

“Since the launch of Ether futures in February, we have seen steady growth in liquidity in these contracts, especially among institutional traders. At the same time, the price of ether has more than doubled since these contracts were introduced, creating demand for a micro-sized contract to make this market even more accessible to a broader range of participants. Micro Ether futures will offer even more choice and precision in how they trade Ether futures in a transparent, regulated and efficient manner at CME Group,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.

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.

The CME also provided updated metrics about its micro Bitcoin futures, which averaged 21,000 contracts, including more than 2.7 million total contracts since their launch in May. Moreover, launch-to-date, more than 675,500 Ether futures contracts (equivalent to about 33.8 million ether) have traded.

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