In 144 Hours, Bitcoin Derivatives Begin Trading On CBOE’s Futures Exchange

The Chicago Board of Options Exchange (CBOE) will launch its bitcoin futures at 5:00 p.m. CT on Sunday, December 10, 2017, with a pre-opening period beginning at 4:15 p.m. CT. The first full day of trading will be Monday, December 11, 2017.

“Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure,” said Ed Tilly, chairman and chief executive officer of CBOE Global Markets. “We are committed to encouraging fairness and liquidity in the bitcoin market.”

CBOE’s bitcoin futures arrive just over a week before those of CME Group, set to launch on December 18, 2017. According to Reuters, CBOE and CME plan to have intraday price limits and initial margin rates of 30 and 35 percent respectively. CBOE has waived all CFE transaction fees for XBT futures through December 2017.

Tyler Winklevoss, Chief Executive Officer of Gemini, said, “Developing a regulated derivatives market is the next logical and crucial step towards advancing the broader digital asset market. We have been working for years to build infrastructure to grow the digital asset market and today’s news marks a significant milestone.”

Trading under the ticker symbol “XBT,” CBOE’s derivative is a cash-settled contract based on Gemini’s auction price for bitcoin, denominated in USD. Final settlement value for XBT futures will be the official auction price for bitcoin (rounded to the nearest penny) as determined by the Gemini Exchange at 4:00 p.m. ET (3:00 p.m. CT) on the final settlement date.

ETHNews previously reported on CBOE and Gemini’s exclusive licensing agreement for bitcoin data, a multi-year deal that they negotiated in August 2017.

Trading hours for an expiring XBT futures contract end at 2:45 p.m. CT on its final settlement date. Full trading hours are listed below:

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As explained in a summary of product specifications, the contract multiplier for an XBT futures contract is 1 bitcoin. This means that each contract relates to the underlying price of 1 bitcoin.

Contract expirations are as follows:

"The Exchange may list for trading up to four near-term expiration weeks ('weekly' contracts), three near-term serial months ('serial' contracts), and three months on the March quarterly cycle ('quarterly' contracts).
Initially, the exchange will list three near-term serial months."

The minimum price interval is 10.00 points USD/XBT, equivalent to $10.00 per contract. The individual legs and net prices of spreads in XBT futures may be in increments of 0.01 points USD/XBT, equivalent to $0.01 per contract.

For XBT futures contracts, the minimum block trade quantity is 50 contracts if there is only one leg involved in the trade and the minimum price increment for a block trade in XBT futures contracts is $0.005 points USD/XBT. Block trades are privately negotiated futures, options, or combination transactions that are permitted to execute apart from the public market.

The product specifications also include strict position limits.

"A person: (i) may not own or control more than 5,000 contracts net long or net short in all XBT futures contract expirations combined and (ii) may not own or control more than 1,000 contracts net long or net short in the expiring XBT futures contract, commencing at the start of trading hours 5 business days prior to the Final Settlement Date of the expiring XBT futures contract."

CFE believes that the XBT futures contracts will provide:

On Friday, the Commodity Futures Trading Commission (CFTC) released a statement following CBOE and CME’s self-certification of their bitcoin futures products. The agency also addressed a new contract for bitcoin binary options by Cantor Exchange.

At present, LedgerX is the only cryptocurrency derivatives trading platform live in the US. In addition to CBOE and CME, Nasdaq and Cantor Fitzgerald are also aiming to launch bitcoin derivatives.