Bakkt unveils the specifications of Bitcoin Daily Future contracts
Bakkt unveils the specifications of Bitcoin Daily Future contracts

Bakkt unveils the specifications of Bitcoin Daily Future contracts

By Fabio Lugano - 29 Jan 2019

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Bakkt reveals the specifications of the Bitcoin Daily Future contracts which will be the heart of its financial activity, on the ICE (Intercontinental Exchange) website, where the futures will be traded.

While “option” contracts give the right to buy a security or an asset in a certain quantity, at a certain price and on a certain date, a futures contract, on the other hand, generates the obligation to perform the contract, even when the closure of the position leads to a loss.

The Bakkt Bitcoin Daily Future contract, according to the published specifications, will be processed on the ICE platform, regulated according to the rules of the federal CFTC, the Commodity Futures Trading Commissions, and will be regulated as any futures contract with physical delivery of assets, as is the case for other commodities like oil, and concentrated frozen orange juice.

The ICE will guarantee the execution of the contract on expiry with its physical delivery, a very important element since the asset is totally immaterial, the deposit and delivery of which will be handled by Bakkt.

The market will be free and there will be no trading limitations, so one can also expect the possibility to short the contract, the so-called short selling.

The pseudonym with which the Bakkt futures will be indicated on the ICE market is “ICUS” and provides a No Cancellation Range (the area within which it is not possible to cancel the contract, even if issued by mistake) of 50 dollars and a Price Reasonability Limit, placed to avoid heavy errors in the issuance of orders, equal to 150.

The basic unit of the contract is equal to 1 bitcoin (BTC), while the limit is 100 thousand contracts.

Therefore, at the current price, it is possible to conclude contracts between the minimum of 3200 dollars and 320 million.

The minimum lots of transactions will be of 10 contracts, with adjustments of the minimum price of 2.5 dollars. Moreover, the published specifications explain that the contract adjustment time will be between 4.58 and 5.00 PM every day, while the opening hours are very long, equal to 22 hours a day.

As already pointed out, the rules of this Bitcoin Daily Future of Bakkt, from now on ICUS, do not differ too much from other physical goods, allowing traders to experience a uniformity of behaviour, with the obvious difference that the delivery problems of a BTC are much less than those of bacon or orange juice.

Fabio Lugano

Graduated with honors from Bocconi University, Fabio is a consultant for companies and wounded shareholders of the Banche Venete. He is also the author of "Scenari Economici", and lecturer and analyst of cryptocurrencies since 2016.

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