CBOE Says It Will Not Offer XBT Bitcoin Futures Contracts This March

Mar 15, 2019

The Chicago Board Options Exchange (CBOE) has disclosed that it will not offer new Bitcoin (BTC) futures market this month as it plans to evaluate its position regarding digital assets trading.

CBOE Futures Exchange announced this via a statement released on Thursday, March 14. The statement read:

“CFE is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading.”

It continued:

“While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading.”

CBOE is Assessing its Crypto Futures Offering

In December 2017, CBOE became the first regulated exchange to offer Bitcoin Futures trading shortly after the Commodities and Futures Trading Commission (CFTC) approved proposals for Bitcoin futures. Shortly after, the Chicago Mercantile Exchange (CME) offered its first Bitcoin Futures also.

The Bitcoin Futures allows investors to trade on the price movements without having to own, store and bitcoins directly. The contracts track the price of bitcoin over a stipulated period of time. The bitcoin futures contracts offered by CBOE is settled in U.S. dollars.

Although CBOE decided against offering new XBT futures contracts, it noted that all listed contracts are still available for trading. The currently listed futures (XBTM19) will expire in June, this year.

Although it did not go into details, CBOE said that it was re-evaluating its approach on digital assets futures in general. This could be attributed to the daily trading volumes of its XBT futures contracts compared to those listed on its rival CME exchange. John Todaro, who responded to the news posted a chart on twitter showing the difference between volumes on CBOE and CME.

Last April, Matthew McFarland the Managing Director of CBOE Future Exchange (CFE) said the company was closely monitoring the XBT trading experience with a view to making changes. At the time, CBOE announced a change to the minimum increments to on its futures contracts lowered from 10 points ($10) to 5 points ($5).

As Smartereum reported, the daily trading volumes of bitcoin futures on CME increased by 93 in the second quarter of 2018 and a further 43 percent in the third quarter of 2018. The increase has been attributed to certain incentives the exchange put in place since last year to encourage investors.

Earlier this week, analysts interviewed for a Bloomberg report suggested that bitcoin is losing steam according to technical analysis of its charts. “The entire industry is ripe to resume a path to lower prices. Conditions are akin to November [2018], just prior to the collapse,” Bloomberg analyst Mike McGlone said.

That's cause Cboe bitcoin futures trading volumes have been getting crushed by CME. pic.twitter.com/4dpi9Tfuwg
— John Todaro (@JohnTodaro1) March 14, 2019

Will CBOE still Launch Ethereum Futures Contracts?

Following its decision not to list new bitcoin futures this month, and its plan to reevaluate its approach to digital assets, CBOE may slow down on its intention to list the first regulated Ethereum futures contracts in the United States.

This has been held back by certain regulatory concerns around Ethereum. But earlier this week, the Chairman of the U.S. Securities and Exchange Commission (SEC) in an official letter confirmed that Ethereum is not a security as declared last year by SEC commissioner Himman. Last year CBOE indicated it was waiting for approval for the CFTC.

Also, the CBOE withdrew its proposal to the SEC for a rule that will allow the listing of the first ever Bitcoin ETF citing the government shutdown at the time.

While CBOE reviews its approach, the space is gradually becoming crowded as Bakkt and ErisX has revealed plans to list bitcoin futures contracts. However, unlike CBOE, these new entrants plan to list physically settled futures contracts which will be settled with actual bitcoins.