The notice states that Dealer Members must mark-to-market and margin exchange-traded cryptocurrency futures contract positions daily at the greatest of (i) 50% of the market value of the contracts; (ii) the margin required by the futures exchange, such as the CBOE, on which the contracts are entered into; (iii) the margin required by the futures exchange's clearing corporation; and (iv) the margin required by the Dealer Member's clearing broker. By this time next week, the Chicago Mercantile Exchange (CME) will have launched their Bitcoin futures product (December 18, officially), and Nasdaq will also be getting in on the action early next year.
But the futures contracts have problems of their own. Optimists hope that bitcoin futures will become well-established and even make underlying markets more robust by dampening volatility. The vast majority of physical delivery futures contracts are never actually delivered the buyer or seller rolls them into another contract. Futures can successfully meet this need. This is a different kind of account than your usual cash equity brokerage account, but the basic idea is the same.
The addition of bitcoin futures on mainstream financial exchanges has had a double effect.
"'Our evidence finds that the price of Bitcoin has been artificially inflated by speculative investment, putting it in a bubble", said Larisa Yarovaya, one of the report's authors and a lecturer at Anglia Ruskin University. We know relatively little about what informs the price of Bitcoin. In 2015, storage wallet Bitstamp was hacked, resulting in the theft of $5.1 million (US) worth of bitcoin. And these are just a few cases. And experts believe that development of bitcoin futures will be a significant step toward increasing of institutional money in the cryptocurrency. While there is a perceived level of risk, trading futures may provide exciting rewards when used effectively.
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The rally is likely connected to the impending launch of bitcoin futures on CME. This shows that the bullish run in bitcoin is still active, and may continue through the weekend and into the next week.
Chicago-based Cboe's bitcoin futures surged almost 20 percent in their debut on Monday, and more than 4,000 contracts changed hands by the end of the 4:15 p.m. EDT settlement. And that process is already underway. On the first trading day, there was a huge interest in buying the bitcoin futures.
What other bitcoin investment products are available for Canadian investors?
The news comes as Jay Clayton, the chairman of the Securities and Exchange Commission in the United States warned main street investors and market professionals about the potential dangers of cryptocurrencies on Tuesday (see online story). If approved by regulators, this new ETF would track bitcoin futures, rather than holding the cryptocurrency directly.