Crypto Traders Are Asking For Shake Up In Future Contracts
Feb 24, 2018 Posted / 9119 Views
With the beginning of December, the trading of Bitcoin future contracts also commenced on Cboe Global Markets and CME. As per Bloomberg reports, the joint number of trading of both companies as on Wednesday is 10,000. The source also confirmed that at least 30 firms trade on Cboe.
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Bitcoin futures provides a cash-settled future contracts experience to the user where the speculator receives the difference between the speculated price and the settled price at the time of expiration of the contract. Whereas in a physical settlement the buyer gets the ownership of Bitcoin by paying a fixed price as at the time of the agreement.
The bitcoin future contract attracted those speculators willing to speculate prices without investing. Individuals determine amount as per their calculations and affect the market.
But traders such as B2C2, DRW and DV, the multi-million dollar investors and first bitcoin future investors conduct tradings in physical settlement and also want Cboe and CME to do the same.
The price on Cboe is ascertained through an auction of single exchange whereas CME's rely on price exchange. As per competitors, this technique doesn’t provide a precise price. In an interview with BusinessInsider, founder of John Lothian news stated that each exchange shows different price as different countries have various regulatory which affects the value of a coin accordingly.
"There are so many variables," - John Lothian
As per sources the spokesperson of DV chain, Garrett See believes that trading through physical settlements is a better trading option.
"If they are physical delivery futures, then I know exactly what my P&L will be if I hold it to expiration. If they're cash settled, I have to make another trade to unwind the spot position at expiration and I have to hope that I can unwind my position at the expiration price (including fees) even though I may not have the ability to trade on the exchanges that are being used to determine settlement price." - Garrett See
The founder of B2C2, Max Boonen prefers physical settlement model but also not particular about the way to implement settlement infrastructure.
“Basically, the clearing houses and the FCMs/brokers would need a bitcoin infrastructure to transfer crypto," - Max Boonen
In an email interview with CME, Business insider got to know that they are not looking for physically settled contracts. CME further added that they keep on making amendments as per their client demands.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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