CME Ready to Launch a New Crypto Product – Micro Ether Futures

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The Chicago Mercantile Exchange (CME) is one of the biggest derivatives marketplaces in the world. It is also known in the cryptocurrency world due to the introduction of Bitcoin futures back in December 2017. Since then, the CME has decided to introduce two new cryptocurrency products to the markets.

In February this year, CME opened its gates for investors or traders who wanted to trade the biggest altcoin, Ethereum, which this company allowed via Ethereum futures. In May, CME introduced Micro Bitcoin futures, which represent one tenth of a Bitcoin. And now, CME has officially stated that it is ready to launch a new cryptocurrency product – Micro Ether futures.

Micro Ether futures launching in a month?

On Tuesday the CME stated that it is ready to launch Micro Ether futures, which should start trading on 6th of December. As of now, this financial product is still awaiting regulatory review, but it is expected that the Micro Ether futures will be approved, since CME has experience with Micro products as well as cryptocurrency products.

The new contracts of Micro Ether futures should be cash-settled and will be based on CME CF Ether-Dollar Reference Rate. This is simply a daily reference rate of the U.S. dollar price of the Ethereum that the CME uses.

It is very possible that the launch of this product has something to do with the increasing popularity of the second biggest cryptocurrency and the biggest altcoin. The price of Ethereum has grown by more than 170 % since the CME introduced Ether futures contracts in February this year. At that time the price of Ether was around 1 670 dollars, while now, Ethereum is sitting on its ATH with the price of about 4 500 dollars, according to CoinGecko.

However, Giovanni Vicioso, Senior Director of Equity and Alternative Investment Products for CME Group has stated that the popularity of Ether is very visible. For instance, he stated the following:

“We have had requests from clients who are interested in accessing Ether using our contract either for exposure or to manage Ether price risk, for a smaller contract. Ether futures has really had a much quicker adoption in terms of institutions and sophisticated traders that are accessing that contract.”

Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products, has moreover added that since the launch of Ether futures in February, the company has seen steady growth in liquidity of the given contacts, most notably from the side of institutional investors.

Micro Ether futures should represent a one tenth of Ethereum (0.1 ETH), which means that as of now, they would be valued at approximately 450 dollars. The logic behind micro contracts is simple. According to company executives, the new product can provide an efficient and cost effective way of hedging for institutional as well as individual investors. This was also noted by McCourt:

“Micro Ether futures will offer even more choice and precision in how they trade Ether futures in a transparent, regulated and efficient manner at CME Group.”

Crypto is more and more popular on CME

The inclusion of Micro Ether products on CME shows that the hunger for cryptocurrency-related products is growing. If the Micro Ether futures product is approved by the regulators and starts trading on 6th of December, it would mean that only this year the CME has introduced three new cryptocurrency products to its clients. And seeing the volumes of the previous two, one can understand why CME is introducing more.

The Ether futures contracts have traded more than 675 500 contracts since its launch, which is equivalent to 33.8 million ETH. Moreover, the Micro Bitcoin futures, which have only started trading in May, have already traded more than 2.7 million contracts, with each Micro Bitcoin futures contract worth 0.1 BTC.

Overall, the CME Group has a diverse portfolio of over 20 different Micro products which have already traded more than 1 billion contracts since their introduction. This also clearly shows that the demand for Micro products and their unique characteristics are sought after by the investors and traders.