CME Exec: No Plans for Physically Settled BTC Contracts

The Chicago Mercantile Exchange (CME) Group has no current plans to launch physically settled Bitcoin (BTC) contracts, a senior executive has said.

Tim McCourt, its global head of equity index and alternative investment products, told MarketsMedia on Oct. 1 that all new contracts or products are driven by customer demand.

CME’s new options will be settled in BTC futures

CME has been trading BTC futures since December 2017 and recently revealed plans to launch options in the first quarter of 2020, pending regulatory review.

Its current Bitcoin futures contracts are settled in cash. McCourt said that “the number one demand from customers has been for options on our futures” since the launch of its futures product.

Since December 2017, there have been 20 successful futures expiration settlements, with more than 3,300 individual accounts trading the product. Year to date, a reported 7,000 CME Bitcoin futures contracts — equivalent to roughly 35,000 BTC — were traded on average each day, breaking a new all-time high this May. 

Institutional interest in Bitcoin is growing

McCourt noted that “institutional interest in Bitcoin is growing but they need time to become familiar with the market and get approval to use new products.”

Current participation is reportedly spread between hedge funds, commodity trading advisors and asset managers, as well as crypto-focused hedge funds and trading firms.

The planned forthcoming options will use CME Group’s existing technology, matching engine and clearing mechanisms, and the product is currently undergoing the group’s standard testing procedures.

Bakkt launches physically settled futures to tepid market

In late September, Intercontinental Exchange launched its much-anticipated, regulated platform Bakkt — offering physically settled BTC futures contracts and custodial services approved by the Commodity Futures Trading Commission.

Bakkt's sluggish launch has been identified as a possible contributing factor to Bitcoin’s recent price weakness. In the days following Bakkt’s debut, BTC/USD plummeted from near $10,000 to under $8,000.

Bakkt chief operating officer Adam White earlier told reporters that the platform hoped its futures would aid price discovery in the long-term.