CME Group to expand crypto derivatives with Micro Bitcoin

Derivatives marketplace CME Group is set to expand its crypto derivatives suite in the near future by introducing a brand new Micro Bitcoin futures contract. The planned launch date for this new feature is currently said to be 3 May, pending review from regulators.

Set to be one-tenth of one regular bitcoin, this smaller-in-size Micro Bitcoin contract will aim to supply market participants with another tool with which to execute bitcoin exchange tactics or hedge the price risk of bitcoin in a more cost-effective and efficient way. The type of market participants targeted will range from active and sophisticated individual traders to institutions. The contract will simultaneously retain the same benefits and features of regular bitcoin futures.

Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products, said:

Tim McCourt, CME Group

Tim McCourt
Source: LinkedIn

“Since the launch of our Bitcoin futures contract in 2017, we have seen steady, ongoing growth of liquidity and market participation in our crypto derivatives, especially among institutional traders.

Micro Bitcoin futures will exist alongside CME Group’s already vast array of cryptocurrency derivatives, a suite of which is rapidly growing due to customer demand. The current suite included bitcoin options and futures, as well as recently introduced Ether futures.

CME Group

Reports have found that an average of 13.8K contracts in CME Bitcoin futures, which are equivalent to around 69K bitcoin, have been traded on a daily basis as of March 2021. Additionally, the recently launched CME Ether futures has witnessed trades of 767 contracts (the equivalent of 38.4K ether) on average per day since it was first introduced on 8 February.

This latest contract is set to be based upon the reference rate of CME CF Bitcoin, and as such, will be cash-settled. This rate acts as a daily reference of the value of bitcoin in terms of the US dollar. Once again, it must be noted that the launch of the new cryptocurrency derivative will be entirely subject to CME’s rules.  

Tim McCourt added:

The introduction of Micro Bitcoin futures responds directly to demand for smaller-sized contracts from a broad array of clients and will offer even more choice and precision in how participants can trade regulated Bitcoin futures in a transparent and efficient manner at CME Group.

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