CBOE Signs with Gemini in Bitcoin Market Data Agreement

Xavier Trudeau
Août 3, 2017

U.S. exchanges are racing to secure a piece of the growing cryptocurrency market, The Wall Street Journal reports.

Chicago-based CBOE Holdings, the largest United States options exchange, today announced that it has secured a multi-year exclusive license from Gemini Trust, the bitcoin exchange created by Tyler and Cameron Winklevoss.

Should the company secure the authorities' permission to operate as a regulated venue for derivative contracts settling in digital currencies, it will open the market up to a much larger customer base who are now unable to participate in the Bitcoin market due to compliance restrictions.

Performance defies a setback in March, when the SEC rejected an application from the Winklevoss twins - most noted for their high-profile bust-up with Mark Zuckerberg over the origins of Facebook - to list exchange-traded funds linked to the digital currency on the BATS exchange. The deal also gives CBOE additional rights to roll out further cryptocurrency derivatives based on Gemini market data, and to distribute its market data over the exchange's feeds.

Deters said the bitcoin futures, once reviewed, will be available to both institutional and retail investors. The currency hit an all-time high of US$2,954 in mid-June.

U.S. equity options exchanges have been plagued by flatlining volumes in recent years.

"We've really come to the conclusion recently that cryptocurrencies are here to stay", John Deters, chief strategy officer of CBOE parent CBOE Holdings, told CNBC in a phone interview. He also said that CBOE could consider options on virtual currencies.

Miami International Holdings, which oversees two options exchanges and has plans to launch an equities venue, has a stake in LedgerX, which won approval from the Commodity Futures Trading Commission for a bitcoin options exchange just last week. This makes us the natural choice for the development and trading of bitcoin futures.

In a statement, CBOE chairman and CEO Ed Tilly said, "We very much look forward to responding to the growing interest in cryptocurrencies through the creation of bitcoin futures traded on a regulated derivatives exchange, with the many expected benefits that this brings, including transparency, price discovery, deep liquidity and centralized clearing".

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