CME to Launch Crypto Ratio Futures as Cboe Eyes Fidelity’s Spot BTC ETF

CME to Launch Crypto Ratio Futures as Cboe Eyes Fidelity’s Spot BTC ETF

Chicago
Mercantile Exchange (CME), one of the world’s largest derivatives marketplaces,
plans to launch
crypto Ether (ETH)/Bitcoin
(BTC) ratio
futures on July 31, 2023. This is even as Cboe BZX Exchange, one of four
equities exchanges operated by Cboe Global Markets, approached the US
securities watchdog on Thursday, requesting permission to list the Wise Origin Bitcoin
Trust, according to Reuters.

Top asset manager Fidelity filed the Trust in March 2021 with the Securities
and Exchange Commission, seeking to create an exchange-traded fund (ETC) that tracked
the price performance of BTC, Finance Magnates reported. However, the SEC rejected the financial services giant’s proposal
for the spot BTC
ETF in January last year.

The ‘BlackRock’
Fever

Cboe’s application to list Fidelity’s fund comes on the heels of resurging
interest in cryptocurrency exposure among institutional investors. Following fund manager BlackRock’s
proposal to the Securities and Exchange
Commission (SEC) two weeks ago, ARK Invest, Fidelity, Invesco and WisdomTree
have also sought similar approvals.

Surprisingly, the wave of new
applications follows the SEC’s recent crackdown on ‘unregistered’ crypto
exchanges in the United States, including Binance and Coinbase. Experts believe that traditional investors
are trying to ride on the watchdog’s latest campaign to secure permission for their spot BTC ETF applications previously turned down.

CME Group
Expands Crypto Futures Offering

Meanwhile,
CME’s planned crypto ratio futures targets BTC and ETH, the two largest
cryptocurrencies by market capitalization. Crypto ratio futures are a type of
derivative contract that enables traders to bet on the relative price movements
of two different digital assets. These contracts are traded on
decentralized exchanges such as Binance Futures.

CME in the
statement noted that its launch of the contract next month is dependent on
regulatory review. It added that the crypto ratio futures will follow the same listing
cycle as its BTC/ETH futures contracts.

“The
Ether/Bitcoin Ratio futures will be cash-settled to the value of CME Group
Ether futures final settlement price, divided by the corresponding CME Group
Bitcoin futures final settlement price,” the derivatives exchange further elaborated.

Giovanni
Vicioso, CME Group’s Global Head of Cryptocurrency Products, believes that the ratio futures contracts
will give investors the ability to “capture ether and bitcoin exposure in a
single trade without needing to take a directional view.”

“This new
contract will help create opportunities for a broad array of clients looking to
hedge positions or execute other trading strategies, all in an efficient,
cost-effective manner,” Vicioso added.

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This article was written by Solomon Oladipupo at www.financemagnates.com.

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