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Bitcoin futures launch amid margin anxieties
Trade Journal
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The CBOE exchange listing has again raised the discussion that bitcoin and other crytpocurrencies should be regulated The Chicago Board Options Exchange (CBOE) became the first US derivatives exchange to start trading bitcoin futures on December 10, despite widespread concern surrounding high margin requirements. According to reports, bitcoin’s inherent volatility and lack of regulatory oversight led CBOE to raise margin requirements to 44% from 33% to hedge protect against possible instability. In spite of this, the price of the futures shot up significantly overnight, a few hours after trading opened, and the value of bitcoin rose to over $16,000. Fellow exchange CME will also begin to offer futures contracts similar to those traded by CBOE on December 18, with Nasdaq expected to follow suit. Late last week, some of the US’ biggest brokers suggested that they are unwilling to allow the majority of their clients to trade the futures. On Thursday, the chief executive and president of the Futures Industry Association Walt Lukken wrote an open letter to Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo expressing his apprehensions with the manner in which bitcoin futures have come to market. “While suited for standardised products, this process does not distinguish for a product’s risk profile or unique nature. We believe that this expedited self-certification process for these novel products does not align with the potential risks that underlie their trading and should be reviewed,” Lukken’s letter read. The CFTC confirmed that it will be monitoring trading activity: if it determines that the margin is inadequate, it will force the clearing organisation to increase the margin levels. KEY TAKEAWAYS