Why Interactive Brokers Founder Fears Bitcoin Futures

[Overnight]

For most folks I guess a mini-size would be the safer instrument to play with (if they come out with it.)

 

[Millionaire]

That is a small contract. Though I guess if it goes up it will get bigger!

Exchanges are smart/greedy, the smaller the contract size the more lots that get traded, the more fees they get.

 

[eastern_warrior]

Huge margin coming and not great for those wanting to trade it but I sure will sleep better knowing IB won't take a massive hit when these - and they will - implode. As a clearing member, I can see why he is so upset. The exchange can fall back on the other members to bail out those who fail and hence has little incentive to charge a high margin. I bet if CME was not a "for profit" institution they would not be offering these.

 

[JackRab]

I think the margin won't be 100%, maybe 20-50%... but even if the margin is going to be 100%... I think people will still trade it. It will be cheaper to trade and decent spread...

Those futures are not going to be created for retail traders with 5-10k in their account... It's geared towards bigger accounts.

 

[helpme_please]

As a IB customer, it makes me sleep sound when Interactive Brokers founder has a strong sense of risk. Bitcoin daily fluctuation can be >20% per day. With highly leveraged futures, the broker can be pulled down with their clients.

 

[JackRab]

As a IB customer, it makes me sleep sound when Interactive Brokers founder has a strong sense of risk. Bitcoin daily fluctuation can be >20% per day. With highly leveraged futures, the broker can be pulled down with their clients.

Exactly... that's why I think the margin should be at least 20%... probably more. When it becomes more clear how liquid the futures trade and perhaps options, the margin could come down IMO.

 

[helpme_please]

Exactly... that's why I think the margin should be at least 20%... probably more. When it becomes more clear how liquid the futures trade and perhaps options, the margin could come down IMO.

I would prefer bitcoin futures to be unleveraged given its very high daily fluctuation. If IBKR were to offer bitcoin futures, make it unleveraged, please. Frightened of a MF Global or Refco scenario. Alright, make it 80% margin. Sounds out of place to have unleveraged futures. Might as well buy ETF.

 

[JackRab]

I would prefer bitcoin futures to be unleveraged given its very high daily fluctuation. If IBKR were to offer bitcoin futures, make it unleveraged, please. Frightened of a MF Global or Refco scenario. Alright, make it 80% margin. Sounds out of place to have unleveraged futures. Might as well buy ETF.

I don't mind if IB puts the margin at 80 or 100%. But there needs to be a margin system since we're talking about futures... so CME will set an exchange level, which IB will increase at broker level I'm sure. I reckon CME will set it at 20%.. 6k? Overnight should be 100% IMO, since bitcoin is still traded 24/7

 

[Cdntrader]

Overnight? The market is always open in cryptos. No difference in time of day.

 

[carrer]

Too much risk if Bitcoin futures is leveraged and it is not being traded during off market hours or weekends. The bitcoin market can move a lot during the weekends.