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Published: Sat, December 02, 2017
Economy | By Melissa Porter

Bitcoin rebounds after USA regulator approves futures

Bitcoin rebounds after USA regulator approves futures

On Oct. 31, the company announced that it would launch a bitcoin futures contract sometime in the fourth quarter "pending regulatory approval".

The bitcoin price rallied to a 24-hour high following the announcement that US derivatives exchange CME has self-certified to list bitcoin futures contracts in mid-December.

The deal with the Commodities and Futures Trading Commission agency also enables Cantor Exchange to offer bitcoin options, another type of derivative contract, which allows for trading without taking ownership of an underlying asset.

The CFTC has had extensive discussions with the exchanges over the past few months as they have developed these products, resulting in "significant enhancements to contract design and settlement", among other changes, the regulator says in its announcement.

CME Group's Bitcoin futures will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the USA dollar price of bitcoin, said CME.

"Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts", Giancarlo adds. The activities will include monitoring and analyzing the size and development of the market, positions and change in positions over time, open interest, initial margin requirements, and variation margin payments. Commission staff will additionally conduct reviews of designated contract markets, derivatives clearing organizations (DCOs), clearing firms and individual traders involved in trading and clearing bitcoin futures.

The agreement with the exchanges does not mean the CFTC endorses the digital currency or the various trading products, he said.

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