While there are plenty of options to trade bitcoin as a currency, until recently bitcoin has not been used much for share trading.
But the cryptocurrency’s role is slowly changing and the endorsement this week from the CME group, the world’s largest futures and options exchange, is bound to speed this process up.
The CME has caused a stir by announcing that it will launch bitcoin futures.
“Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract,” Terry Duffy, CME Group chairman and CEO, said in a statement.
Depending on who you ask, bitcoin still inhabits the space between being taken seriously and being dismissed as a currency used for shady deals. Large exchanges – apart from potentially the Intercontinental Exchange, the US exchange which trades oil and gas futures and equity futures in the UK – remain fairly sceptical about the currency.
A quick call to various London exchanges revealed the following: they remain fairly cautious about bitcoin despite the large price rises and increased volumes of trade and are far from being ready to follow the CME’s lead.
Most of the exchanges said that they don’t see their shares or commodities traded in bitcoin any time soon and they have no plans to allow bitcoin as collateral. The ICE is a slight exception as it dipped its toe into the bitcoin waters by buying a bitcoin company in 2015.
Since then, however, it slowed down any moves in that direction.
As ever, trading houses and brokerages have been quicker to react than larger institutions and have started offering other options to share traders.
First Global Credit, a trading company with offices in the UK, US, Hong Kong and Germany, now allow clients to use bitcoin as a collateral margin for share trading. This covers over 200 different shares, mainly listed in the US but also on the London Stock Exchange.
The industrial sectors include tech, internet, healthcare and entertainment stocks
Bitcoin can also be used as a collateral margin for dozens of Exchange Traded Funds, primarily emerging market ETFs covering Brazil, Russia, China and Mexico.
The company also offers Currency Switch, a service which allows the bitcoin-denominated collateral to be changed in and out of other currencies without closing stock trades.
After the CME’s big decision, other brokerages and trading houses are likely to follow suit.
Expect similar options to be announced soon.
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