CME Group has detailed the specifications of the Bitcoin futures contract. The contract unit amounts to 5 bitcoins, as defined by the CME CF Bitcoin Reference Rate (BRR). The minimum price fluctuation will be $5 per bitcoin or $25 per contract.
The Calendar Spread and Basis Trade of Index Close (BTIC) will be $1 per bitcoin or $5 per contract. BTIC transactions enable market participants to execute a basis trade relative to the official close for the underlying value for more efficient cash management.
Cash Settlement Means Futures Trading Won’t Affect Bitcoin Prices
Contrary to the oil or gold futures markets, where clients that end up holding a contract at the end of the settlement period need to take physical delivery of the product, Bitcoin futures are cash settled.
This means that the underlying demand for Bitcoin futures will not in fact be directly affecting the price of the asset itself. This aspect of the contract is something that is worth noting for those who fear that Wall Street might take charge of the value of Bitcoin in the future. The only way fund managers will be able to influence the price is if they trade the digital currency on an exchange.
The cash settlement will be referent to the Final Settlement Price which is equal to the CME CF BRR on the last day of the contract.
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Trading Times and More
The Bitcoin futures contract will be trading between 5:00 PM CT and 4:00 PM from Sunday to Friday via CME Globex and CME ClearPort, and between 5:00 PM and 10:00 AM CT on the same days on a BTIC basis.
The listing cycle includes the nearest two months in the March quarterly cycle (Mar, Jun, Sep, Dec) plus the nearest 2 months that are not in the cycle. The initial listing of the contract will include Dec 2017, Jan 2018, Feb 2018 and Mar 2018.
Trading will end on the last Friday of the contract month. Spot position limits are set at 1,000 contracts.
Price Limits: A 20% Cap
The contracts will be subject to price limits for a given business day with the reference made in comparison to the Bitcoin Futures settlement price settled at 4 PM GMT every day.
Special price fluctuation limits are set at three levels. The first one is at 7 percent above or below the previous day’s settlement price, the second is at 13 percent and the third one at 20 percent. Trading will not be permitted outside of the 20 percent above/below band.