CME CEO Terry Duffy doesn’t own bitcoin, but says it might change the world
- CME CEO Terry Duffy said the exchange has measures in place to manage the risk of trading bitcoin futures.
- Duffy may not own bitcoin himself, but he believes the cryptocurrency may change the future of finance.
CME CEO and Chairman Terry Duffy may not own bitcoin, but he thinks it could change the world. That’s why CME Group is launching bitcoin futures Sunday – with some extra regulatory safeguards.
“Regulation is important to any product – when you look at cryptocurrencies or anything else you trade — so we continue to evolve,” Duffy said on CNBC’s Fast Money.”
Competitor Cboe, which launched bitcoin futures Dec. 10, will offer contracts as low as 1 bitcoin. But CME is only offering contracts on 5 bitcoins, in part to ward off retail participants.
“The last thing I want to have happen is for participants that have never traded futures contracts before to enter into CME’s markets and begin trading bitcoin futures,” Duffy said. “We’re targeting the more professional type trader and the institutional investor.”
To determine pricing, CME will tie futures to a bitcoin reference rate, which is an average of four exchanges.
To offset bitcoin’s notorious volatility, CME has already raised initial margins – or the amount put up at the start of the trade – to 47 percent from 35 percent, and set maintenance margins at 43 percent. Duffy said CME has no qualms about raising the rate again.
“If, in fact, this thing starts to move precipitously, our margins will increase, our velocity logic will kick in and other functions we have, as well,” Duffy said.
Duffy doesn’t own bitcoin personally, but he believes the cryptocurrency may well change the future of finance.
“I think we’re going through a major change in finance,” Duffy said. “For us not to list it and to miss potentially helping something that could change the world would be wrong, too. I think we’re taking a very measured approach.”