CBOE Options Exchange To Open Up Cryptocurrency Derivatives In 2017
In a move to introduce cryptocurrency derivatives trading, the Chicago Board Options Exchange (CBOE) has joined forces with Gemini. The latter, a digital asset exchange platform, is managed by investors and twin brothers Tyler and Cameron Winklevoss.
The Chicago exchange currently has the largest share of US options markets. Its influence will be further increased as it incorporates bitcoin options and derivatives into its offering.
Although the cryptocurrency market is at a sensitive time in its nine-year history, CBOE does not appear perturbed. Pending approval from the regulatory body, CBOE and Gemini hope the deal will assist in the introduction of bitcoin futures by year-end. Options Clearing Corporation will take the reins in clearing the bitcoin futures.
Based in New York, Gemini’s offering includes daily cryptocurrency auctions, as well as bitcoin and ether markets. CBOE aims to use Gemini market data for the creation of new and dedicated indices. Additionally, they plan on distributing Gemini market data over their own data feeds.
CBOE CEO, Ed Tilly, believes CBOE is the “natural choice” regarding developing and trading bitcoin futures. His reasoning is that in addition to options and derivatives, CBOE provides foreign exchange and ETF innovations as part of their current product offering.
The move would allow institutional investors to reduce the risk associated with the volatility of the cryptocurrency market. The combined cryptocurrency value across all divisions increased from $10 billion to $115 billion between January and June this year.
The deal closely follows a similar transaction made recently by LedgerX, which allows the company to settle and trade bitcoin derivatives. The US markets regulator, Commodity Futures Trading Commission, authorized this approval.
These platforms are not alone in their decisions to push further into cryptocurrencies, with Ripple and Ethereum being common default choices. It is predicted that they will be followed soon by many others in moves of a similar nature.