CBOE plans to launch Bitcoin futures

7 years ago - Published in Finance, Fintech Land, Technical Analysis

The Chicago Board Options Exchange (CBOE) has partnered with Gemini, the bitcoin exchange backed by investors Cameron and Tyler Winklevoss, as part of a bid to launch cryptocurrency derivatives trading.

According to the Wall Street Journal, the agreement will find the CBOE leveraging Gemini's data for the launch of dedicated product listings in 2017. Opened to traders in 2015, Gemini is a New York-based exchange offering bitcoin and ether markets, as well as daily auctions of the cryptocurrencies.

As part of the agreement announced today, CBOE gains an exclusive license to tap the bitcoin data generated by Gemini's digital currency trading platform to develop derivatives and indexes. CBOE spokeswoman Suzanne Cosgrove declined to comment on how much CBOE is paying, if anything, for the exclusive license from Gemini.

The CBOE is still waiting for regulatory approval on the move, the report said, which would provide institutional investors with an avenue to hedge against volatility in the fast-growing cryptocurrency markets. Already, the total value of all cryptocurrencies from just over $10 billion at the start of the year, to a high of $115 billion in June.

"We very much look forward to responding to the growing interest in cryptocurrencies through the creation of bitcoin futures traded on a regulated derivatives exchange, with the many expected benefits that this brings, including transparency, price discovery, deep liquidity and centralized clearing," CBOE CEO Ed Tilly said in the statement.

Further, the announcement comes at a time when institutional investors are increasingly taking note of this price appreciation, and are seeking to determine opportunities for the technology that fit into their existing business models.

Most notably, it follows a decision by the Commodities Futures Trading Commission to grant a license to LedgerX last week that would allow it to clear and custody cryptocurrency derivatives for assets like bitcoin and ether.

Gemini is led by Tyler and Cameron Winklevoss, who gained fame in their legal battle with Facebook CEO Mark Zuckerberg over the founding of the social media giant.

CBOE's recently acquired Bats Global Markets teamed with the twins on a separate application for a bitcoin exchange-traded fund. The Securities & Exchange Commission rejected an initial application earlier this year, but has agreed to review it on appeal, Cosgrove said.