CME Group, a Chicago-based derivatives marketplace, has launched Micro Bitcoin futures, further expanding its suite of crypto derivatives offerings, the company said in a press release on Tuesday.
“At one-tenth the size of one bitcoin, micro bitcoin futures will provide an efficient, cost-effective way for a broad array of market participants – from institutions to sophisticated, active traders – to fine-tune their bitcoin exposure and enhance their trading strategies,” Tim McCourt, CME head of equity index and alternative investment products, said in the release.
By lowering the barrier of entry, the product is expected to allow more traders to be able to gain exposure to bitcoin, according to John Bartleman, president of TradeStation Group, the parent company of an online trading platform that will offer clients micro BTC futures.
Investing in the Micro futures allows traders to gain access to the benefits of regulated derivatives investment while working with a contract at 1/50 of the usual size, and which is settled to the regulated CME CF Bitcoin Reference Rate (BRR).
It also allows the trader to invest on a regulated exchange and enjoy the price discovery of transparent futures, where all participants see same prices and quotes, according to the release. Most cryptocurrency exchanges do not synchronise prices, so that there can be a considerable difference between trading platforms.
And the ability to buy small amounts of bitcoin in futures contracts adds more granularity to trading and risk-management strategies. Traders who use Micro Bitcoin futures are able to fine-tune exposure far more than when investing in other instruments.
The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimisation and reconciliation services through TriOptima, and trade processing services through Traiana, according to the release.