Facts About CBOE and CME Bitcoin Futures Contracts

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Two exchange operators Cboe Global Markets Inc (CBOE.O) and CME Group Inc (CME .O) are gearing up to launch major bitcoin futures contractors. CBOE.O already launched its contract on Dec 10 while CME is planning to do the same on Dec 17. In this article, we are going to review the major differences and what you should expect from the two operators.

Differences between CBOE.O and CME.O Futures Contracts

  • For the Cboe, the Bitcoin Futures Contract uses the ticker XBT. This ticker will be equivalent to one bitcoin. On
    the other hand, BTC will use ticker BTC which will be equal to five bitcoins.

PRICING STRUCTURE

There are some similarities and differences between the two operators and here are some of them

  • Both CMEs and Cboes futures contracts will be settled using U.S dollar currency. This will pave the way for the exposure to bitcoin without depending solely on one cryptocurrency.
  • CMEs contract is expected to be priced off the CME Bitcoin Reference Rate. This reference rate contains the pricing data of the cryptocurrency exchanges. Currently, it is made up of GDAX, Bitstamp, Kraken, and itBit.
  • For Cboe, the contract is priced off of one auction which usually takes place at 4.00 p.m. Eastern time (2100GMT). This also the last day that Gemini cryptocurrency will take place.
Cboe CME bitcoin futures contracts trading

illustration picture

TRADING HOURS

The two operators have different trading days and time. Cboe XBT contract mainly trades on CFE during the regular trading hours which is from 9:30 a.m. to 4:15 p.m. on Monday up to Friday. On these days, the trading hours can be extended up to 6 p.m.

On the other hand, CME will trade on CME ClearPort and CME Globex from Sunday to Friday. The trading hours will be commencing at 6 p.m. till 5 p.m. There will be a one hour break on each day at around 5 p.m.

MARGIN RATE AND CLEARING

Cboe futures contract gets cleared through Options Clearing Corporation and here a 40% margin rate will apply to each contract that is cleared. CMEs contract will clear by passing through CME ClearPort. Here, a 35 percent initial margin rate will apply to each contract.

CONTRACT EXPIRATIONS

Cboe released a statement saying that it is considering to provide three different options for contract expiration. They are 4-weekly contracts, 3 near-term serial months and the final contract will be in three months on March quarterly cycles.

CME has stated that it will make arrangements for monthly contracts for at least 2 months in the March quarterly cycle. These serial months will be March, June, September, and December.

PRICE LIMITS AND TRADING HALTS

Cboe will stop trading in its contract for exactly two minutes in case the closest bid on the contract that is close to the expiration date is above or below 10 percent of the daily settlement price of that deal a day before the actual business day. If the price is 20 percent higher or below, settlement figure of the contract before the business day, the futures will be stopped for 5 minutes.

CME is also expected to apply circuit breakers (price limits) to the bitcoin futures of 7%, 13% and 20% to the fixing price. No trading will take place beyond the 20% mark.

Sources : Cboe and CME

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