The Chicago Board Options Exchange (Cboe) has announced that it is dropping any new futures contracts this month. The decision may have been necessitated by low volumes. Cboe indicated that its CFE futures platform was currently pondering its position on derivatives .
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In a on March 14, the exchange revealed: “CFE is not adding a Cboe (USD) (“XBT”) futures contract for in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for . While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for .”
Current futures contracts remain available for until June when they expire. The Cboe futures were greeted with wild enthusiasm when they first entered the market in December 2017, when prices were at their highest. Together with the Chicago Mercantile Exchange (CME) futures, which launched around the same time, the instruments were viewed as major stepping stones into the mainstream, key to attracting institutional capital into the market.
However, the events that followed in the ensuing months did not inspire a lot of confidence, as XBT volumes nosedived, in part due to the 2018 sustained market downturn.
Declining Volume
to research company Tradeblock, XBT has been losing ground to futures from the Chicago Mercantile Exchange whose volumes have dwarfed XBT’s in recent months despite starting on an equal footing. Overall, futures volume has fallen since reaching a peak in the summer of 2018.
“We tracked notional futures volume at both the CME and Cboe since December of 2017. While both firms launched competing products, in the same month over the course of 2018, the CBOE lost significant market share to the CME,” Tradeblock explained.
The report further indicated that while futures volume initially saw significant growth each month following inception, spot activity was steadily declining during the same period.
“Given these divergent trends, total futures volume across the CME and CBOE reached near parity with total spot volume across five of the largest U.S. accessible digital currency exchanges. This changed somewhat recently as futures volume has fallen while spot volume has picked up modestly,” Tradeblock added.
Now, with Cboe dropping futures, it will be interesting to see how these trends change, as the market prepares to launch several new futures platforms. Bakkt, Erisx, and Coinflex are all planning to launch futures.
What do you think about Cboe’s decision to discontinue futures? Let us know in the comments section below.
Images courtesy of Shutterstock and Tradeblock.
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Published at Fri, 15 Mar 2019 16:46:39 +0000
