TD Ameritrade will allow qualified customers to trade CBOE's bitcoin futures (XBT) starting on Monday, December 18, 2017.
ETHNews spoke with TD Ameritrade's managing director of futures and forex, JB Mackenzie, who addressed the fee structure, margin requirements, and risk tolerance associated with the cryptocurrency derivatives product.
According to Mackenzie, TD Ameritrade's fee structure for XBT will be the same as it is for all its futures products. Notably, the firm will allow clients to short the product (unlike Interactive Brokers, which declined to do so, at least initially).
With regard to margin requirements, McKenzie confirmed that TD Ameritrade will require 1.5 times the CBOE's mandated margin requirement – at this point, that exact number is unclear (when ETHNews last spoke with CBOE, the initial position requirement was 44 percent and the maintenance requirement was 40 percent).
TD Ameritrade may also soon support the CME's bitcoin futures. Due to launch on Monday, December 18, the CME product is different from CBOE's (five-bitcoin contracts versus one-bitcoin contracts respectively). TD Ameritrade plans to monitor the liquidity and trading of CME bitcoin futures before deciding whether to offer service accordingly. Mackenzie noted that the CME product might appeal to investors with more capital (i.e., institutions) because of the larger contract structure.
A spokesperson for TD Ameritrade provided ETHNews with additional details about its XBT support.
"As you know, TD Ameritrade has been actively monitoring activity around CBOE Bitcoin futures contracts, following our standard protocol for giving approved clients access to any futures product," they wrote. "At this point we believe the market is showing signs of adequate liquidity for CBOE products. Therefore, on Monday, December 18th, we will launch the CBOE Bitcoin futures contract (XBT) on our platform for a subset of qualified retail clients."
The "adequate liquidity" in the cryptocurrency derivatives market has been a point of contention among cryptocurrency stakeholders and market watchers. Perhaps, that is part of the reason that TD Ameritrade is significantly increasing its margin requirements.
"In order to mitigate risk to the market and to our clients, we have put a minimum balance of $25,000 in place to be eligible trade Bitcoin futures. In addition, we will be increasing the margin requirement to 1.5X the CBOE mandated margin requirement."
"We will monitor the market's reaction and assuming the response is positive, continue to roll out approved client accounts in waves," added TD Ameritrade's spokesperson. "We are treating the Bitcoin futures products as we would any other futures products, where we ensure the marketplace has the proper liquidity before offering to our clients. Recent news has created excitement around Bitcoin, therefore, we've seen increased client demand."
"Additionally, although they will begin trading on Sunday night, we will not open up trading on CME Bitcoin futures. As we are doing with the CBOE product, our standard protocol is to monitor the launch of a new product to ensure there is enough liquidity in the marketplace."