Nasdaq and Cantor Fitzgerald Plan to Join Bitcoin Derivatives Market

New York-based firms aim at futures and swaps market for the top cryptocurrency.

The Wall Street Journal is reporting that increasing trader demand for the hottest asset of the year by institutional investors is pushing more players into the market. According to a report by the financial newspaper, NASDAQ and Cantor Fitzgerald are poised to enter the space in the first half of next year.

After Chicago-based CME and CBOE, competition from New York is around the corner. With the CME announcing its plans to release the contract for live trading before the end of this year, the newcomers will play catch up.

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The recent prices and trading volumes spike across the crypto world is set to transfer to Wall Street. While some are expecting the underlying volatility of the asset to be reduced, Bitcoin futures announced by the CME are cash settled. This means that physical (or in this case digital) delivery of the underlying asset is not mandatory after the expiration of the contract. As such they may not be impacting prices in the crypto world and the CME’s cash-settled futures contract is more akin to a CFD than to a commodity futures contract.

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The WSJ article cites a source that claims that NASDAQ is aiming to deliver a contract that is tied to the worldwide price of Bitcoin.

At present significant price discrepancies are observed from East to West. While Bitcoin was trading around $11,500 at Europe-based Bitstamp which will be one of the venues used for pricing by the CME, Korean traders at Bitthumb paid almost $1,000 more per BTC.

Cantor’s plans are different, as the company is preparing a three month Bitcoin swap. The exchange is aiming to provide a guarantee to clients with built-in protections limiting prospective losses.

According to the plan cited by the WSJ, the firm expects retail traders to be the first adopters with institutional investors to follow. The CEO of Cantor Fitzgerald outlines that the new crypto asset class is here to stay.

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