CFTC publishes advisory for exchanges listing crypto derivatives

Posted: 22 May 2018 12:30 pm
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The information provided aims to educate and assist exchanges to develop risk management programs.

United States exchanges and clearinghouses registered with the Commodity Futures Trading Commission have received official guidance for listing digital currency derivative products, such as cryptocurrency futures.

The CFTC Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) issued the joint staff advisory via a press release on the regulator’s website this week.

The information provided aims to educate and assist exchanges to develop risk management programs. The advisory will also help exchanges and clearinghouses more efficiently manage self-regulatory responsibilities.futu

Key areas highlighted in the advisory for listing new cryptocurrency derivatives include enhanced market surveillance; close coordination with CFTC staff; large trader reporting; outreach to member and market participants; and derivatives clearing organization risk management and governance.

The advisory provides guidance on certain enhancements when listing a derivative contract based on virtual currency and clarifies the CFTC staffs’ priorities and expectations in its review of new virtual currency derivatives to be listed on a designated contract market or swap execution facility, or to be cleared by a derivatives clearing organization.

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Long-term future pricing options has been touted as a vote of confidence for the virtual currency economy, potentially paving the way for less market volatility and further increased investment over time.

Earlier this month it was reported that American multinational investment bank Goldman Sachs will start trading bitcoin futures contracts on behalf of its clients and create new, flexible forwards contracts. However, there is no plan to buy and sell actual bitcoins.

Cboe, the largest US options exchange, began trading bitcoin futures in mid-December last year. About one week later, Chicago Mercantile Exchange (CME), started offering futures contracts to prospective investors.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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