CME Group to Launch Micro Ether Futures on December 6
As part of its expansion plans, the Chicago Mercantile Exchange Group will introduce Micro Ether futures on December 6, which will broaden the company’s crypto derivatives products. The Micro Ether futures are one-tenth of an Ether in size and will provide market players with a cost-effective solution to hedge their spot ether price risk and execute ether trading strategies more simply.
The CME currently offers ether futures trading with a contract size of 50 ETH ($222,000). The contract size for micro ether futures will be substantially smaller, allowing for more precise transactions.
According to reports, Ethereum is currently trading at an all-time high of $4,486, having pushed beyond its previous all-time high of $4,467 recently. Due to the asset’s growing price, CME issued Bitcoin mini futures in May. The idea is that individual or institutional investors seeking flexibility can participate by making modest investments.
Ether futures are the most recent addition to CME Group’s growing cryptocurrency derivatives portfolio. Micro Bitcoin futures, for example, have traded over 2.7 million contracts. Over 675,500 Ether futures contracts have traded since its introduction, equating to around 33.8 million Ether.
Micro Ether futures will round out CME Group’s portfolio of over 20 Micro products, which have traded over 1 billion contracts since their inception. The new contract will be cash-settled, according to CME Group, and will be based on the CME CF Ether-Dollar Reference Rate, which is a once-a-day reference rate for the US.dollar price of ether.
Futures contracts bind traders to purchase or sell an asset at a specific price on a specific date in the future. It’s a massive market, with 24-hour futures volume on exchanges far exceeding spot volume (the buying and selling of a cryptocurrency.) For example, the 24-hour spot trading volume on Binance, the world’s largest exchange, is $34 billion. However, its derivatives business is worth $80 billion.
Reaction from CME
In a statement, Tim McCourt, global head of equity index and alternative investment products at the CME Group, said, “Since the launch of Ether futures in February, we have seen steady growth in liquidity in these contracts, especially among institutional traders. At the same time, the price of ether has more than doubled since these contracts were introduced, creating demand for a micro-sized contract to make this market even more accessible to a broader range of participants. 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.”
CME Group (www.cmegroup.com) is the world’s largest and most diverse derivatives marketplace, enabling clients to trade futures, options, cash, and OTC markets, optimize portfolios, and analyze data, enabling market players around the world to effectively manage risk and capture opportunities. CME Group exchanges provide the broadest range of global standard products based on interest rates, equities indexes, foreign exchange, energy, agricultural products, and metals across all major asset classes.