Adds another dimension to the universe of derivatives products circling cryptocurrencies
The Small Exchange said Thursday it plans to notice file with the Commodity Futures Trading Commission to list a stock index futures contract based on an index of 17 cryptocurrency-related publicly traded companies.
The index, which comprises companies behind various cryptocurrencies, not the cryptocurrencies themselves, includes Advanced Micro Devices (AMD), PayPal (PYPL) and Taiwan Semiconductor Manufacturing Company (TSM), as well as Coinbase Global Inc. (COIN), Riot Blockchain Inc. (RIOT) and Grayscale Bitcoin Trust (GBTC).
The stocks included in the index were chosen because of their high correlations to bitcoin and ethereum, as well as to BLOK ETF (Amplify Transformational Data Sharing ETF), a fund that invests in blockchain technology, said Donald Roberts, president and CEO of The Small Exchange.
In response to questions from JLN, Roberts said in an email that the product will be “cheaper and more capital efficient than any ETF that will come out, smaller margin requirement than any micro bitcoin future, and not as cumbersome as trading the actual digital asset on any non-registered crypto exchange.”
CME Group currently lists bitcoin, micro bitcoin and ether futures, as well as options on bitcoin futures. Cboe Global Markets’ Cboe Futures Exchange was the first U.S. exchange to launch bitcoin futures in December 2017, but it no longer trades the contract.
Both the CME and the Cboe Futures Exchange self-certified their contracts for bitcoin futures products, Roberts said The Small Exchange is taking the same route with the CFTC for its new product.
Earlier this month, Eurex launched a European cryptocurrency product, Bitcoin ETN futures, a contract based on the BTCetc Bitcoin Exchange-Traded Crypto listed on the Frankfurt Stock Exchange.
Pending the Small Exchange’s filing with the CFTC, it plans to launch its stock index futures contract on October 4.