TD Ameritrade and Ally Invest to Offer Bitcoin Futures

With CME Group Inc. (CME), the nation’s largest futures exchange, gearing up to launch bitcoin futures on Dec. 18, online brokerage firms have been taking sides, with some gearing up to offer the ability to trade those futures while others are staying out of the cryptocurrency craze.

Late last week, the CME and Cboe Global Markets got the green light from the Commodity Futures Trading Commission to list their futures with the CME. The futures are set to launch on Dec. 18, and the CBOE says that it will have a timing announcement soon. Bloomberg has been polling online brokerages ever since CME made its intentions public in November to get a sense of which ones will offer bitcoin futures to their client base. Among those surveyed, TD Ameritrade and Ally Invest were in the "yes" camp, while Fidelity Investments was a "no". Charles Schwab and E*TRADE declined to comment when contacted by Bloomberg.

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"What's exciting to us about it is it provides a two-sided market," JJ Kinahan, chief market strategist at TD Ameritrade Holding Corporation (AMTD), told Bloomberg in November. "With natural buyers and sellers, that helps to put a more reasonable volatility on the product." Meanwhile, Rich Hagen, president of Ally Invest, told Bloomberg late last month that customers of Ally Financial Inc.'s (ALLY) Ally Invest have expressed interest specifically in the bitcoin futures and that, if CME launches the product, the discount brokerage will enable current and new futures customers to access the contracts immediately.

Meanwhile, a spokesman for Fidelity Investments said that it does not have any current plans to offer bitcoin futures to its brokerage customers, saying that clients who do trade digital currencies can link their Coinbase account. In the case of Charles Schwab, a spokesperson said that the firm is waiting to see how the market develops before jumping on the cryptocurrency bandwagon. "While Charles Schwab is not currently engaged in cryptocurrency trading, we are monitoring this new market and evaluating our clients' interest levels and familiarity with cryptocurrencies, along with their dynamics and risks," said Schwab senior manager of communications Kaitlyn Downing. "We intend to study the new proposed bitcoin futures contracts and weigh their associated risks with an eye to protecting our clients’ interests before we make these products available."

The move by some brokerages to embrace bitcoin futures when they become available comes at a time when the cryptocurrency is exploding in popularity – and not only among tech-savvy investors. With the price of bitcoin surging from around $1,000 at the start of the year to more than $11,000, all sorts of investors want in the action. Among the online brokerages, TradeStation is the trailblazer, announcing late last month that it will be ready on day one to enable its existing and new customers to trade the futures contracts.

James Putra, director of innovation and strategy at TradeStation, said in a video post that the firm is already seeing demand for the new investment products and that CME bitcoin futures will help drive "much more" capital into the cryptocurrency markets as well as boost awareness. "If you think about a pension fund or a hedge fund, they're not used to putting a billion dollars into a market that they can't liquate very easily," said Putra, noting that institutional investors also aren't keen on worrying if those cryptocurrency tokens disappear because the market is unregulated. "Using something like the futures or eventually other exchange products that might come up like ETFs and options, they are going to have a lot more of those protections and comforts that they are used to."