The first CFTC regulated option on futures contract for bitcoin
• Bakkt Bitcoin Cash Settled Futures:
A new cash settled futures contract available on ICE Futures Singaporehttps://t.co/7CqqZXRJKN
— Bakkt (@Bakkt) December 9, 2019
A success story to remember
The company further shed light on the design of its products in its Medium post. The company starts by referring to Intercontinental Exchange’s acquisition of the International Petroleum Exchange in 2001. This acquisition led to the eventual introduction of the ICE Brent Crude Oil Futures, which Bakkt describes as “the global benchmark for crude oil and trades over 1 million lots per day.” Since the launch, ICE has introduced a number of additional products. These include “oil contracts across futures, options and swaps, many of which leverage the benchmark Brent Crude Oil Futures contract.”
This story inspired Bakkt to repeat the success, which is why the exchange is planning on using an already established playbook.
“By starting with the physically delivered Bakkt Bitcoin (USD) Monthly Futures, we have a benchmark contract that provides the foundation for us to develop complementary products based on the needs of our customers,” the post reads.
Besides, according to it, the two new products aim to leverage the benchmark contract.
Bakkt Bitcoin (USD) Monthly Options is, as mentioned above, the first CFTC regulated option on a futures contract for bitcoin. The benchmark Bakkt Bitcoin (USD) Monthly Futures contract serves as its basis. It settles “into the underlying futures contract two days prior to expiry on ICE Futures U.S.” What’s important is that price discovery has no exposure to unregulated bitcoin spot markets. And it occurs completely within the federally regulated market.
“The Bakkt Bitcoin Options offer important hedging, trading and income-generating opportunities to market participants around the world,” the company adds.
Traders get more options to choose from
When it comes to the other new product, Bakkt Bitcoin (USD) Cash Settled Futures, it is important to note that it’ll be available on ICE Futures Singapore. According to Bakkt, the new contract “leverages the settlement price of the benchmark Bakkt Bitcoin (USD) Monthly Futures.” Besides, it has another curious rationale. It lies in the fact that the participants get alternative options to trade. Particularly, those “who are unable to trade our physically delivered contract.
The exchange ends the post on an optimistic note, saying “we have great momentum going into 2020 and an exciting product roadmap.” The latter is all about introducing “new trading products, an expanded custody offering, an innovative consumer payments app, and more.”
So is Bakkt really a threat?
It would be fair to state that the exchange has received a lot of negative feedback since its launch. To remind, some believe that its market entrance has depressed the market.
Besides, in late November Altcoin Buzz begged the question of whether Bakkt destroyed the price of Bitcoin precisely because of Bakkt Bitcoin (USD) Cash Settled Futures. Back then, the community was discontent with the exchange, which ostensibly promised to always settle its futures contracts in BTC.
At press time, it does not seem like BTC price has taken a hit. The mother-of-all-cryptocurrencies is trading at $7,349.
What do you think about Bakkt? Good or bad? Let us know your views.
Previously, Altcoin Buzz also reported that it received NY Regulatory Approval.
