In a move that will help professionalize and legitimize Bitcoin as a financial asset, the CME Group (CME) has announced that it will begin publishing Bitcoin prices as both a real time spot price index as well as a reference rate for use by traders, investors, and the public. While other Bitcoin price indexes exist, this would mark the first time a large asset exchange has taken notice and implemented such a measure.
The CME CF Bitcoin Reference Rate & CME CF Bitcoin Real Time Index
According to the CME website, the CME CF Bitcoin Reference Rate (BRR) and the CME CF Bitcoin Real Time Index (BRTI) will be a standardized reference rate and spot price index with independent oversight. These tools will help in accelerating the professionalization of bitcoin trading and further establishing digital assets as a new asset class. The BRR and BRTI will officially launch November 14th, in the production environment on Simple Binary Encoding (SBE) market data feed. (See also: How To Invest In Bitcoin Exchange Futures)
Several leading bitcoin exchanges and trading platforms will provide pricing data, including Bitfinex, Bitstamp, GDAX, itBit, Kraken and OKCoin.com (HK). The BRR aggregates the trade flow of of these exchanges during a specific calculation window into a once-a-day reference rate of the U.S. dollar price of bitcoin. Calculation rules are geared toward a maximum of transparency and real-time replicability in underlying spot markets. Meanwhile, the BRTI is an index that aggregates global demand to buy and sell bitcoin into a consolidated order book and reflects the fair, instantaneous U.S. dollar price of bitcoin. It is geared toward low latency and timeliness and is based entirely on forward-looking input data. (For more, see: Benefits & Risks of Trading Forex with Bitcoin)
"Digital currency has long-needed participation from a company such as CME Group to elevate the asset class to a new level. We are thrilled to be a member of the oversight committee," said Michael Moro, CEO of Genesis Global Trading. (See also: Is It Possible To Trade Bitcoin Options?)
The Bottom Line
The CME exchange has announced plans to begin reporting bitcoin prices both as a daily reference rate and a live real-time index, aggregating price feeds from global bitcoin exchanges and trading platforms. While other similar indices for Bitcoiin's price already exist, the CME's tool will provide much needed legitimacy for the emerging asset class that is digital currencies.