Markets
The Chicago Mercantile Exchange (CME) plans to launch Bitcoin spot trading: FT
Futures powerhouse Chicago Mercantile Exchange (CME) plans to offer bitcoin spot trading to clients as demand for the product increases among market participants, the The Financial Times reports it on Thursday.
CME is already the leading bitcoin futures exchange by open interest, while offshore and unregulated Binance dominates the spot market.
The exchange has been in discussions with traders who want to trade bitcoin on a regulated market, the FT reported, citing people with direct knowledge of the talks.
CME’s spot trading business could be handled through the EBS currency trading venue in Switzerland, the report adds.
The exchange declined to comment on the news.
The spot market will complement the CME’s existing standard and micro futures contracts, which are widely considered a proxy for institutional activity, and help the exchange become more dominant in the cryptocurrency market. The CME is already the leading bitcoin futures exchange by open interest, while offshore and unregulated Binance dominates the spot market. Coinbase (COIN), the only cryptocurrency exchange traded in the United States, is third in terms of daily trading volume.
The availability of the spot market means that traders can now set up complex multi-leg strategies involving the spot and futures markets in one regulated location. Bring in the traders are known to short trade CME futures versus long spot market positions on other exchanges or in spot ETFs.
“Cryptocurrency exchanges could lose some business with the potential debut of a bitcoin spot market on the CME, a global derivatives giant, as the current bull run is particularly driven by institutions, which prefer to trade on regulated streets,” Markus Thielen, founder of 10x Search, said.
UPDATE (May 16, 07:20 UTC): Adds more details.
UPDATE (May 16, 08:19 UTC): Adds Coinbase in sixth paragraph.