Yesterday, the CME Group officially announced that it will launch benchmark rates for Bitcoin and Ethereum for the APAC region, or Asia-Pacific, in September.Â
CME (Chicago Mercantile Exchange) is the world’s leading derivatives exchange, and CME Group is the company that owns and operates this exchange.
In December 2017, CME was among the first global exchanges to launch the Bitcoin price futures exchange, and it is still among the leading players in this specific field.
Summary
CME: the benchmark rates for Bitcoin and Ethereum
The APAC-specific benchmark rates for BTC and ETH will be launched in collaboration with CF Benchmarks, which is the leading provider of cryptocurrency benchmark indices.
These rates will provide US dollar reference prices of the two major cryptocurrencies for Asian markets once a day, and will be published at 4 PM in Hong Kong and Singapore.
CF Benchmarks is authorized and regulated by the UK FCA, under the EU BMR, and consists of market data from six exchanges.
Its benchmark indices are provided through public methodologies and transparent governance so that monitoring is possible.
CF Benchmarks indices have already been used to settle over $500 billion of cryptocurrency derivative contracts by CME Group and Kraken Futures.
The benchmark rates will not be tradable, and will complement the existing CME CF Bitcoin Reference Rate (BRR) and CME CF-Ether Dollar Reference Rate (ETHUSD_RR), which are published at 4 PM London time, and the CME CF Bitcoin Reference Rate New York (BRRNY) and CME CF Ether-Dollar Reference Rate New York (ETHUSD_NY), which are published at 4 PM New York time.
BRR and ETHUS RR will continue to be used for settlement of all CME Group Bitcoin and Ether futures contracts.
So in addition to the two rates for Europe, and the two for the US, CME will now also provide those for the Asia-Pacific region, which is the most populous in the world and includes China, Japan, India, Singapore, Southeast Asia and Australia.
The Asian market
After the United States, the Asian market is by far the most important market for cryptocurrency.
In fact, not only Japan and South Korea are countries where many crypto assets are traded on exchanges, but to these must be added Singapore, which is one of the most important crypto hubs in Asia.
Theoretically, Dubai is also part of Asia, although the United Arab Emirates (UAE) markets are closer to European markets than to those in the East.
But the real behemoth of the Asian markets is of course China, with Hong Kong also returning to provide crypto services to retail, and China Mainland never really being able to enforce the crypto trading ban.
Indeed, many believe that China Mainland will also be forced to open up to crypto markets again, and this is likely to make Asian markets the preponderant ones, especially if India also opens up to cryptocurrencies for good.
There is no real ban in India, but authorities have been trying to make things difficult for crypto traders for years. Should both the Chinese ban and Indian qualms fall, APAC’s will easily become the world’s largest crypto market.
The comments
CME Group’s Global Head of Cryptocurrency Products, Giovanni Vicioso, said:
“These new reference rates are designed to meet the ever-evolving needs of global participants in the growing digital asset space. Year-to-date, 37% of total crypto volume at CME Group has been traded during non-U.S. hours, with 11% of trades coming from the APAC region.
As we continue to see more institutional clients use our Bitcoin and Ether futures products in active portfolios or structured products like ETFs, these APAC reference rates will allow market participants to more accurately and precisely hedge cryptocurrency price risk with timing more closely aligned to their portfolios.”
CF Benchmarks CEO Sui Chung added:
“Crypto adoption continues apace and CF Benchmarks is delighted to facilitate financial institutions in providing regulated financial products to Asian markets with the introduction of APAC variants to our market defining Bitcoin Reference Rate and Ether-Dollar Reference Rate.
As variants these benchmarks will be calculated and administered to the same exacting standards enjoyed by their existing London and New York counterparts, which have done so much to build investor and institutional confidence in crypto financial products.”
