The Future of Bitcoin Future Contracts – Slow, measured, with no small investors

The Future of Bitcoin Future Contracts – Slow, measured, with no small investors

Chicago Chief Financial Officer Terry Duffy explained in a recent interview that the decision to list the bitcoin on the futures market in the last quarter of 2017 was not taken temporarily. It was a deliberate effort to bring a tested technology to customers with big funds to help the bitcoin mature.

CME Director, about future bitcoin contracts

Scarlet Fu asked a direct question. If self-certification practice in the commodity exchange industry eliminates or excludes major players such as Goldman Sachs who were loaded with future contracts they did not want, poisoning the waters. CME Director immediately replied that he did not.

I do not think that’s happening. I spent a lot of time with all the people. We talked about all the products and informed them about our thinking. At the same time, there is still a problem of competitiveness in relation to which we must be cautious. The self-certification process is relevant to how quickly Bitcoin was introduced.

The issue of self-certification has frequently occurred in tandem with the massive drop in bitcoin prices in recent weeks. It has become the central issue of this year’s first meeting of the authorities. Both CME and CBOE rivals have been asked to protect the standard investment tradition.

Duffy said that “bitcoin products on the future did not go through the standard review program for six months. Anyone could have looked at our intellectual property and created a product the same. We do not have the same pattern as security. Ours is completely different. I think the self-certification procedure works. We worked with the authorities, we worked more closely with them because of the unique nature of this product.

Bitcoin is a proven convenience

CBOE were the first to list future contracts. CME entered the market a week later. This has been seen as a validation of the legitimacy of digital coins. CME is as mainstream as possible. It has several cryptos shifts and holds, among other things, the Dow Jones index.

On the issue of self-certification, Duffy justifies the decision to list the bitcoin. “It’s a product that has been on the market for nine years. He did not show up yesterday. Volatility in traditional markets has declined over the past two years. Bitcoin was volatile. People are looking for some sort of volatility to make profits. Suddenly, the product entered the front page. We all talk about bitcoin and the subject is very much discussed, “Duffy explained. The conversation often revolves around volatility and risk. CME is not looking to introduce more risk but to manage it.

We list the bitcoin on the future and list it with a new set of standards. I said today at the shareholders meeting that I will not cut standards to make more money from the product. It is important to address this market slowly and make sure that the product is properly launched.

Fu questioned indignantly whether the very large margin originally set at 43% would be low. To look ahead, usually margin margins are below 10%. Duffy looked surprised and seems confident in the long-term bitcoin program.

Investor protection

I did not say that. I would not do that instead of trying to bring up the volume. I think the product needs time to grow. I think we need to involve more people, more traders. One of the reasons why we have 5 bitcoins per contract, compared to bitcoin contracts, is that I want to make sure they do not attract what we call “mother and dad” to trade. I want to make sure people have an idea of ​​what it is all about. They do not want to attract people to a market they can not navigate, “he warned.

The CME Director justified the high margins even at the time the price dropped, saying:

When I listed Bitcoin, it was 19500 dollars on the first day. Today we are under 9,000. We have a 43% margin, as you said earlier. We had a drop of over 50% of the product. We still maintain the initial margin of 43% today. It shows the risk management process we have for all classes of assets.

Duffy also said they did not decide whether to list other cryptomonas. “I was very clear about the company’s leadership, the committee and the shareholders. It’s new, controversial, but if you look at the evolution of finance, everything was new and controversial. We have a measured approach to cryptomonas. We have no immediate plans to come with new cryptomonas, “he concluded.

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