Highlights:
- Nasdaq seeks SEC approval to launch Bitcoin index options, tracking the CME CF Bitcoin Real-Time Index.
- The options would offer a new way for institutional investors to hedge Bitcoin exposure, enhancing market maturity.
- Approval would mark the first crypto derivatives cleared by the U.S. Options Clearing Corporation (OCC).
Nasdaq has filed with the U.S. Securities and Exchange Commission (SEC) to launch and trade Bitcoin Index Options, marking a significant step in expanding cryptocurrency derivatives. The proposed options would be based on the CME CF Bitcoin Real-Time Index, providing institutional investors with a new mechanism to hedge their Bitcoin exposure.
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JUST IN: 🇺🇸 Nasdaq seeks SEC approval for #Bitcoin index options – Reuters pic.twitter.com/KG1g5MFjqA
— Bitcoin Archive (@BTC_Archive) August 27, 2024
The proposed Bitcoin Index Options, identified as XBTX, are set to track the CME CF Bitcoin Real-Time Index (BRTI), a benchmark developed by CF Benchmarks. This index tracks Bitcoin futures and options contracts on the CME Group’s exchange platform. Consequently, this ensures real-time pricing data for the cryptocurrency. Nasdaq’s move to introduce these options is seen as a significant development for the maturation and liquidity of the digital assets market.
Enhancing Market Maturity
Greg Ferrari, Nasdaq Vice President and Head of Exchange Business Management, emphasized the importance of this development.
He stated:
This partnership merges the innovation of the crypto landscape with the stability and dependability of traditional securities markets. In addition, this represents a major step forward in the growth and maturity of the digital assets market.
The proposed options feature European-style exercise and cash settlement. The final settlement value would be based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY). The rate is calculated by aggregating Bitcoin-to-USD order data from leading cryptocurrency exchanges. This structure aims to provide a clear reference rate, essentially acting as a closing price in a market characterized by continuous global trading.
CF Benchmarks CEO Sui Chung highlighted the impact of this launch. He noted that the spot Bitcoin options settling to BRRNY will build on the existing futures and options contracts offered by CME.
He said:
These regulated crypto derivatives will empower investors to explore more sophisticated methods of gaining exposure to the largest digital asset, complementing the already popular spot ETFs.
A Response to Growing Market Demand
The timing of Nasdaq’s filing coincides with a period of increased interest in Bitcoin investment products. Recently, BlackRock’s iShares Bitcoin Trust ETF (IBIT) recorded its largest daily net inflow in 35 days, amounting to $224.1 million. Furthermore, this inflow added to a total of $202.6 million in net inflows across all U.S. spot Bitcoin ETFs. Moreover, this indicates a strong demand for Bitcoin-related financial products.
Additionally, data from CoinShares revealed that digital asset investment products saw their largest inflows in five weeks, totaling $533 million from August 18 to August 24. Moreover, this surge in investment underscores the growing interest in Bitcoin and the broader cryptocurrency market.
If approved, Nasdaq’s Bitcoin Index Options would become the first cryptocurrency derivatives to be cleared by the U.S. Options Clearing Corporation (OCC). Moreover, it would provide institutional investors and traders with a cost-effective method to gain or hedge exposure to Bitcoin. Consequently, this will enhance the overall liquidity and maturity of the market.
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