REUTERS/Scott Olson Traders and clerks frantically signal trades in eurodollar futures at the Chicago Mercantile Exchange after the Federal Reserve announced a hike in interest rates, June 30, 1999.
- Two of the largest exchange groups in the world are aiming to launch bitcoin derivatives in the fourth quarter.
- High frequency trading firms DRW and Virtu Financial have both engaged with Cboe and CME on their bitcoin futures products.
- Quantlab, another HFT, is also looking at the market.
Two of the largest exchange groups in the world are aiming to launch bitcoin futures this year, and at least two big trading firms are looking to provide liquidity to the would-be market.
CME Group, the largest exchange group in the world, announced Tuesday it would aim to roll out bitcoin futures. And Cboe, its cross town rival, also has bitcoin derivatives in the works. Futures are contracts that allow two parties to exchange an asset at a specified price at an agreed upon date in the future.
Virtu, a publicly traded high-frequency trader, has met the product development team at CME, and is set to be a liquidity provider, a person familiar with the matter told Business Insider.
Bobby Cho, Head of OTC Trading at Cumberland, a bitcoin mining subsidiary of DRW, another trading firm, said in an email that the firm would be involved "anywhere there is significant volume and size in these markets."
He said:
This is an interesting development in the bitcoin space because it potentially accelerates the pace of involvement of more traditional financial firms. Many already have connections into exchanges like CME, and this is just another product they can plug into. On another front, this likely accelerates the opportunity for a bitcoin ETF to come to market. All of this new activity will open up the market to a different segment of investors who may have been sitting on the sidelines waiting for these types of offerings, allowing them to express their point of view. As the largest liquidity provider in cryptocurrencies, Cumberland will be involved anywhere there is significant volume and size in these markets.
Bradley S. Jonas, chief business development officer at Quantlab, a Texas-based trading, told Business Insider that the firm is watching the CME and Cboe bitcoin efforts with interest, but that it's unlikely to be a "day one mover." Jonas said the firms speaks regularly with CME and that he is set to reach out to them on their strategy for bitcoin futures soon.
"When there's a new product we watch," Jonas said. "If it's profitable then by all means we jump in."
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