The Chicago Mercantile Exchange (CME) Group, the largest US derivatives exchange, is expanding its suite of crypto offerings with micro ether futures. Micro Ether futures contract is listed on CME and subject to its rules.
Chicago-based CME has offered more insights about its newest crypto derivatives.
The new contract is cash-settled based on the CME CF Ether-Dollar Reference Rate, which was developed in partnership with Crypto Facilities to provide a once-a-day reference rate of the US dollar price of ether. The micro contract is sized at one-tenth of one Ether to provide market participants with an efficient way to hedge their risk and more easily execute ether trading strategies.
The launch of ether smaller-sized contract comes after CME introduced its older brother in February, noting that the liquidity in the second largest cryptocurrency derivative has steadily grown among institutional traders since their launch.
At the same time, the price of ether has more than doubled since the standard contracts were introduced, creating demand for a micro-sized contract to make it even more accessible to a broader range of participants. Surging prices led to a jump in open interest and trading volume for CME’s ether futures as investors sought to hedge their positions in the spot market by opening futures positions at the exchange.
Since CME’s ether futures launch in February, more than 800,000 contracts have traded.
CME Group has been reviewing client demand
“The launch of Micro Ether futures underscores the significant growth and liquidity we have seen in our cryptocurrency futures and options. Sized at one-tenth of one Ether, Micro Ether futures will provide an efficient, cost-effective way for a range of market participants – from institutions to sophisticated, active, individual traders – to hedge their spot Ether price risk or more nimbly execute Ether trading strategies, all while retaining the features and benefits of CME Group’s larger-sized Ether futures,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.
CME Group has been reviewing client demand and crypto traders’ interest in Ether derivatives after launching its index tracking prices of the second-largest cryptocurrency.
Micro Ether futures will also complement the exchange operator’s wide range of over 20 micro products, which, since their introduction, have traded more than 1 billion contracts.
Moreover, the CME provided updated metrics about its micro Bitcoin futures, which averaged 27,600 contracts in November, including more than 3.3 million total contracts since their launch in May.
With extra regulatory safeguards, CME Group introduced Bitcoin futures in December 2017, marking a major step in the path to legitimatizing the cryptocurrency.
The Chicago-based venue was not the only exchange to try to capitalize on the crypto frenzy as Cboe pioneered with its own cash-settled bitcoin contracts. However, Cboe decided to discontinue its bitcoin futures trading activities.
