CME Group rolls out EUR-dominated bitcoin and ether futures contracts

abdelaziz Fathi

Derivatives giant Chicago Mercantile Exchange (CME) has roll out euro-dominated bitcoin (BTC) and ether (ETH) futures contracts, the first of its kind crypto derivative product on a regulated exchange.

The new contract size for bitcoin futures equals 5 BTC while the ether product is sized at 50 ether per contract. Both contracts are cash settled, similar to the exchange’s existing dollar-denominated crypto futures, and will be priced off at the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate.

These indexes were developed in partnership with Crypto Facilities to serve as once-a-day reference rates of the euro-denominated price of bitcoin and ether. The index references pricing data using transactions and order book activity from several cryptocurrency exchanges.

“The launch of these new futures contracts builds on the strong growth and deep liquidity we have seen in our existing U.S. dollar-denominated Bitcoin and Ether futures contracts,” said Tim McCourt, Global Head of Equity and FX Products, CME Group. “Our new Bitcoin Euro and Ether Euro futures will provide institutional clients, both within and outside the U.S., with more precise and regulated tools to trade and hedge exposure to the two largest cryptocurrencies by market cap.”

These new contracts will also expand CME Group’s existing suite of cryptocurrency crypto contracts, which include Bitcoin futures and options, as well as micro-sized Bitcoin and Ether options.

With extra regulatory safeguards, CME Group introduced Bitcoin futures in December 2017, marking a major step in the path to legitimatizing the cryptocurrency. Earlier last year, it launched options on its Bitcoin futures contracts, a sign of its growing commitment to cryptocurrencies.

The Chicago-based venue was not the only exchange to try to capitalize on the crypto frenzy as Cboe pioneered with its own cash-settled bitcoin contracts. However, Cboe decided earlier in 2020 to discontinue its bitcoin futures trading activities. On the other hand, CME pressed onward with new crypto products.

Both futures and options are a way for investors to bet on the trends of a cryptocurrency price without having to actually hold the underlying coin, which skirts regulatory and custodian issues. However, futures are, in general, riskier than options as the only financial liability for the latter is the premium paid at the purchase time. On the other hand, futures contracts involve maximum liability.

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