Markets
Chicago Mercantile Exchange (CME) plans to launch Bitcoin spot trading: FT
Futures powerhouse Chicago Mercantile Exchange (CME) plans to offer bitcoin spot trading to its clients as demand for the product increases among market participants, the The Financial Times reported THURSDAY.
CME is already the leading Bitcoin futures exchange in terms of open interest, while offshore and unregulated Binance dominates the spot market.
The exchange has held discussions with traders interested in trading bitcoins on a regulated market, the FT reported, citing people with direct knowledge of the negotiations.
CME’s spot trading activities could be managed through the EBS foreign exchange trading platform in Switzerland, the report added.
The stock exchange declined to comment on the report.
The spot market will complement CME’s existing standard and micro futures contracts, which are widely considered an indicator of institutional activity, and help the exchange become more dominant in the crypto market. The CME is already the top Bitcoin futures exchange in terms of open interest, while offshore and unregulated Binance dominates the spot market. Coinbase (COIN), the only cryptocurrency exchange traded in the United States, is #3 in daily trading volume.
The availability of the spot market means that traders can now set up complex multi-stage strategies involving the spot and futures markets in one regulated location. Carry Traders are known to short CME futures contracts against long positions in the spot market on other exchanges or in spot ETFs.
“Cryptocurrency exchanges could lose some business with the potential arrival of a bitcoin spot market on CME, a global derivatives giant, as the current uptrend is particularly driven by institutions, which prefer trade on regulated channels,” Markus Thielen, founder of 10x Research, said.
UPDATE (May 16, 07:20 UTC): Adds additional details.
UPDATE (May 16, 08:19 UTC): Adds Coinbase to sixth paragraph.