CME, Crypto Facilities Launch Two Ethereum Price Indexes
CME Group has launched an Ethereum reference rate and a real-time ether-dollar index in partnership with Crypto Facilities.
The move has fueled speculation that the world’s largest future exchange may launch another cryptocurrency futures product soon.
However, the company said it had no plans currently for Ethereum futures. But the structure of the indexes is very similar to the ones behind CME’s bitcoin futures.
“The focus right now is on the index itself,” said Tim McCourt, managing director and global head of equity products and alternative investments at CME.
Moreover, the Ether-Dollar Reference Rate will provide a daily benchmark price in US dollars at 4 pm London Time. The Ether-Dollar Real-Time Index will provide a real-time ether price in US dollars.
UK-based exchange Crypto Facilities will calculate both measures with the use of data from trading platforms Kraken and Bitstamp.
Additionally, the reference rates are available on both companies’ websites. It will also be distributed on the CME Group Market Data Platform beginning June 4, 2018.
“The Ether Reference Rate and Ether Real-Time Index are designed to meet evolving needs of this marketplace,” said McCourt. “Providing price transparency and a credible price reference source is a key development for users of Ethereum.”
Ethereum is the world’s second-largest cryptocurrency behind bitcoin. The digital currency has a market value of $70 billion as of Monday.
Further, ether traded near $730, lower about 45% from its record hit earlier this year, according to Coinbase.
It is “something that a few exchanges have expressed interest in listing derivatives on,” Brian Quintenz, commissioner of the Commodity Futures Trading Commission, said at the Consensus cryptocurrency conference Monday.
“The decision needs to be made carefully.”
CME vs. CBOE
The Chicago-based company’s move is similar to last year’s competition with Chicago Board Options Exchange (CBOE). Both companies launched their futures contracts based on bitcoin almost in lockstep.
CME launched bitcoin futures in mid-December, just over a year after launching bitcoin indexes. Many expected the futures to deliver more investors, supporting bitcoin prices higher.
However, the cryptocurrency traded near $8,700 Monday, less than half its all-time high of above $19,000 hit in December.
Earlier in May, the Federal Reserve released a report, suggesting that the bitcoin futures launch led decline from its $20,000 peak.
Trading volume in CME’s bitcoin futures was initially slow but popped in late April to a record high of more than 10,000 contracts. Composite volume Monday was around 5,000 contracts, about a tenth of the WTI crude futures volume, according to FactSet.
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