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CBOE Exchange Reveals Plans To Revise Bitcoin Futures Pricing

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The CBOE Future Exchange is reportedly planning to make changes to the process of pricing bitcoin futures contracts just one month after it ventured into cryptocurrency derivatives instruments.

Matthew McFarland, the managing director of the CBOE Future Exchange (CFE), made the announcement about the new amendment through a recent letter sent to the Commodity Futures Trading Commission (CFTC) on April 17. According to the letter, CBOE has proposed lowering the minimum increment on the future contracts that it offers from 10 points to 5 points. Each point is equivalent to $1.00 USD, and the exchange plans to implement these changes in May.

McFarland pointed out that the changes will have a positive effect on the XBT futures. The letter revealed that the changes would be made to single leg transactions. These are transactions that involve just one contract as opposed to those that involve spread trades. The latter requires investors to purchase or sell two different contracts at the same time. The letter noted that the lowest increment involved in spread trades is 0.01 points which is equivalent to $0.01.

McFarland also revealed that the company has decided to take this course of action based on the data that it has been collecting ever since it started dealing with futures contracts in December last year. He also wrote in the letter that the CFE plans to continue to assess the performance of the XBT futures so that it can decide which changes should be made in the future.

In his letter, McFarland pointed noted that: “CFE believes that the impact of the Amendment will be beneficial to the public and market participants. CFE is not aware of any substantive opposing views to the Amendment.”

The CFE Managing Director was also keen to point out that the changes to be made are also in line with the regulatory guidelines. CFE also believes that the upcoming changes will offer significant benefits to market participants and the public. The statement aligns with the positive outlook that the company’s leadership has demonstrated in public talks about its digital currency products.

Just a month ago, one of the senior executives at CBOE Global Markets presented an argument saying exchange-traded funds (ETF) that are based on bitcoin will be supported by the market. The argument was presented in a letter to the U.S Securities and Exchange Commission (SEC). This means bitcoin and cryptocurrencies in general are becoming more accepted as investment options.

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