Derivatives Giant CME Group Releases Bitcoin Trading Benchmark

Rage Review : The Chicago Mercantile Exchange Group of the United States has entered the ranks of the top ten stock and commodity exchanges exploring blockchain this year, and is also a member of the Linux Foundation Hyperledger project. This Chicago exchange giant actively explores new blockchain technologies to circumvent government regulatory issues in some transactions. As the price of the digital currency trading market tends to stabilize and the scale of transactions gradually increases, the exchange has begun to launch a unified benchmark interest rate for the market, providing a reliable reference interest rate price source for market participants. The relevant benchmark is based on the data of the six major Bitcoin exchanges, developed by CME in cooperation with London Crypto Facilities, and designed in accordance with the International Organization of Securities Commissions' financial market benchmark principles. It is believed that it will play a positive role in expanding the Bitcoin derivatives market.

Translation: Annie_Xu

The Chicago Mercantile Exchange Group (CME Group) announced two bitcoin benchmarks to provide investors with new ways to hedge risk.

The relevant benchmark was developed by CME in cooperation with London Crypto Facilities. The benchmark price is provided by six Bitcoin exchanges, including Bitfinex, Bitstamp, Coinbase, Genesis Global Trading, itBit and Kraken, and is designed in full compliance with global regulatory requirements.

These two benchmarks serve as Bitcoin price references and can help manage Bitcoin investment risks.

Sandra Ro and Timo Schlaefer

The two benchmarks are intended to provide a pathway for investors to create derivatives with “institutional-grade quality,” said Timo Schlaefer, chief operating officer of Crypto Facilities.

“I think anyone interested in trading bitcoin derivatives would welcome this benchmark, especially if the product offering meets regulatory requirements.”

One of the benchmarks is called BRR (CME Crypto Facilities Bitcoin Reference Rate), which is a daily updated reference rate based on the US dollar.

The second benchmark is calculated by Crypto Facilities to meet the needs of Bitcoin buyers and sellers to merge orders.

Sandra Ro, CME executive director and head of digitalization, said:

“These products are designed to enable bitcoin traders, businesses, and other users to access a trusted source of reference rate prices.”

Regulated Bitcoin Derivatives

The BRR Oversight Committee, which includes CME Group, Crypto Facilities and Imperial College London, will develop a code of conduct for participants and review standards and practices.

In February 2015, former Goldman Sachs trader Schlaefer founded the Bitcoin derivatives trading market Crypto Facilities, which was licensed and supervised by the UK regulator, the Financial Conduct Authority.

More importantly, for those looking to build a larger market for bitcoin derivatives, the CME benchmark is designed to be consistent with the IOSCO (International Organization of Securities Commissions) Principles for Financial Market Benchmarks.

Both benchmark services will be available in the fourth quarter of 2016.