CME Group Announces Launch of Bitcoin Futures

Maverick74 said:
You can trade weather on CME and ICE. And Winton is about to launch a series of products entirely devoted to weather.
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I was asking specifically about retail brokers who offered the product, not if they were listed on exchanges which they clearly are. Probably the majority of products on ICE and a good number on CME aren't effectively available to retail traders because there are few or no brokers who allow their customers to trade them. I think weather and insurance premiums fall into that category, and bitcoin futures will not.

I am interested in finding out if American's will be able to trade the Winton products, my assumption is that we won't.
 
I can see a lot of retail ES traders trying Bitcoin futures. More volatile so they can try volatility breakout systems.
 
bone said:
Looking at BitCoin Volatility I'm not convinced that the futures margin requirements would be able to attract such a wide swath of retail traders. I'll put it another way - the contract spec (which is not finalized) would have to utilize a really really modest notional value in order to be affordable for retailers. You're talking vols at present that surpass many typical electricity markets which is mind numbing. I'm also of the mind that the Risk Managers at retail futures brokers are going to be really anxious about firm exposure.
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Right now your choice is to trade bitcoin with 100% margin in an unregulated exchange in a space where such exchanges have a shockingly high history of going under and taking their customers funds with them (there is one unregulated futures exchange available to retail that I'm aware of). So even if CME requires 100% margin, it's a safer alternative to the alternative. They may price them out of reach of retail by doing that, but it won't be the percentage margin requirement that's the problem.
 
Sig said:
I was asking specifically about retail brokers who offered the product, not if they were listed on exchanges which they clearly are. Probably the majority of products on ICE and a good number on CME aren't effectively available to retail traders because there are few or no brokers who allow their customers to trade them. I think weather and insurance premiums fall into that category, and bitcoin futures will not.

I am interested in finding out if American's will be able to trade the Winton products, my assumption is that we won't.
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Yes retail can trade them because they are cash settled. No, you can't trade them in your TD or IB account. But let's say you opened an account with RCG or Advantage, then sure. So if by retail you mean passive mom and pop types, no. If by retail you simply mean someone going going through an FCM then yes. The percentage of people who trade through an FCM is very very small. Partly because mom and pop types can get their fix or CL or ES futures with IB or TD. So yes I do agree that for most unsophisticated players, they are out of reach
 
That
Sig said:
They may price them out of reach of retail by doing that, but it won't be the percentage margin requirement that's the problem.
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Given the nose bleeding vol swings in BTC we've seen to date the intraday and daily maintenance margin changes are going to take most retailers out of the game. That initial margin even at 100% could even be $ VWXYZ, but a 30% bump in maintenance margin would not be small potatoes for many retailers to cough up on short notice.

Another consideration will be that the futures market starting out will be wider than and leaning on the spot cash market. I guarantee that. If there's a big prop firm out there sitting on a couple hundred million worth of bitcoin and they are willing to make markets then fantastic. But it would take several contracted market makers to make it a solid showing. Starting out I would imagine that the futures market will be incredibly thin and spotty. You are going to really have to pick and choose your places. And unfortunately, when you really really need to get out chances are that a thin spotty market will not be kind to you at all.

http://www.cmegroup.com/clearing/risk-management/span-overview.html
 
Sig said:
Right now your choice is to trade bitcoin with 100% margin in an unregulated exchange...
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That isn't actually true. Non-Americans can trade cryptos as CFDs at regular exchanges, with very little margin/capital. There is a spread, but who cares when this thing just keeps going up? :)
 
Pekelo said:
That isn't actually true. Non-Americans can trade cryptos as CFDs at regular exchanges, with very little margin/capital. There is a spread, but who cares when this thing just keeps going up? :)
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Sorry you're right, should have specified Americans.
 
bone said:
That


Given the nose bleeding vol swings in BTC we've seen to date the intraday and daily maintenance margin changes are going to take most retailers out of the game. That initial margin even at 100% could even be $ VWXYZ, but a 30% bump in maintenance margin would not be small potatoes for many retailers to cough up on short notice.

Another consideration will be that the futures market starting out will be wider than and leaning on the spot cash market. I guarantee that. If there's a big prop firm out there sitting on a couple hundred million worth of bitcoin and they are willing to make markets then fantastic. But it would take several contracted market makers to make it a solid showing. Starting out I would imagine that the futures market will be incredibly thin and spotty. You are going to really have to pick and choose your places. And unfortunately, when you really really need to get out chances are that a thin spotty market will not be kind to you at all.

http://www.cmegroup.com/clearing/risk-management/span-overview.html
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I think this market might be more liquid then you think. With the VIX at the levels that it's at, traders are starving for vol. I do absolutely agree that 99% of ET will get blown out of this product faster then ever partly because their trading skills have been so eroded in this low vol tape that they won't be able to adjust.

But remember, there is an underlying market, bitcoin itself. So there is price transparency to some degree. For example if their futures are at 7500 and BTC itself is at 7100 I can at least see the relative pricing. So it's not a ghost market. Plus the level of hedge funds in this space is ridiculous. Supposedly there are over 100 hedge funds dedicated to BTC and blockchain more broadly. So they will be in there. A few prop firms will be there. I think the markets will be fairly tight and I think vol will actually come in a lot once the futures launch. It will still be the most volatile product out there and yes, most home gamers will regret they ever traded it, but that's what makes a market.
 
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