CME Group Inc. (CME), the nation's largest futures exchange, will likely offer bitcoin futures contracts by the end of the year, and TradeStation, the Chicago-based online brokerage, plans to make the contracts available to its clients as soon as it can.
TradeStation is among the few online brokerages that have been embracing cryptocurrencies, namely bitcoin, as it has surged in value all year. Earlier in 2017, anticipating increased interest in cryptocurrency trading, TradeStation added support for real-time market data for CME's two bitcoin indices – the CME CF Bitcoin Reference Rate and the CME CF Bitcoin Real Time Index. Once they become available, the bitcoin contracts can be traded by current and newly funded TradeStation futures accounts. Over the summer, the Chicago Board Options Exchange, or CBOE, the largest U.S. options exchange, said that it will launch bitcoin derivatives trading products in the early part of 2018.
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"We're very excited that TradeStation clients will be able to trade these bitcoin futures contracts starting on the very first day of trading," said John Bartleman, president of TradeStation Group, in a press release earlier this month. "The relative security and stability of trading cryptocurrency derivatives on a registered commodity exchange should alleviate some of the concerns associated with trading bitcoin outright. We believe that CME Group and CBOE Global Markets entering into the bitcoin futures market would mark the beginning of a new era in cryptocurrency derivatives trading, one that should appeal to a much broader and growing cross-section of active traders and speculators."
Cryptocurrency has been wildly volatile all year long, particularly for the leading digital currency bitcoin. In the beginning of 2017, bitcoin was trading around $1,000, and as of Monday, it was valued at around $9,900. Bitcoin is known for wild swings based on regulatory actions and moves by the financial industry either to embrace or rail against the digital currency. Earlier in the year, bitcoin was under pressure after regulators from all sorts of countries, including the U.S., U.K. and China, warned about the risks associated with investing in cryptocurrencies. China has banned bitcoin exchanges and initial coin offerings altogether.
Despite these concerns, the price has surged on news that bitcoin is gaining legitimacy, which was the case when CME recently announced the impending bitcoin futures contracts. Japan has also embraced the currency, setting rules and boosting its legitimacy. According to TradeStation, given CME's position as the world's largest and most diverse exchange marketplace and CBOE Global Markets' position as the biggest U.S. options exchange, these bitcoin futures contracts are expected to see a lot of demand and liquidity both from retail and institutional traders. "Because the contracts will be subject to CME and CFE rules and specifications, there should be added security, transparency, price discovery and risk transfer capabilities versus trading bitcoin outright," TradeStation said in the release.