11:00 AM, Dec 1, 2017 — The Commodity Futures Trading Commission warned about uncertainties around Bitcoin as the CBOE Futures Exchange and Chicago Mercantile Exchange self-certified new contracts for futures products of the virtual currency on Friday.
“Market participants should take note that the relatively nascent underlying cash markets and exchanges for Bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority,” J. Christopher Giancarlothe, chairman of the futures and swaps market regulator, said in a statement. “There are concerns about the price volatility and trading practices of participants in these markets.”
CME Group (CME) said it self-certified the initial listing of its Bitcoin futures contract to launch on Dec. 18. CBOE (CBOE) said it filed a product certification with the CFTC to offer Bitcoin futures trading. And the CFTC said the Cantor Exchange self-certified a new contract for bitcoin binary options.
“We have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets,” Giancarlothe said.
The CFTC expects the futures exchanges to monitor trading activity through information sharing agreements, but said investors should be aware of the “potentially high level of volatility and risk in trading these contracts.”
The CME Group said its futures contract will have an initial margin of 35% and including position and intraday price limits, among other risk and credit controls.
“Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward,” said CME Chief Executive Officer Terry Duffy.
Companies: CBOE Holdings, Inc.
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