CME to Launch Bitcoin Vol Contracts

CME Group is planning a further expansion of its digital assets’ product suite with the projected launch of “first-of-their-kind” bitcoin volatility futures on 1 June, subject to regulatory approval.

The futures will settle to the CME CF Bitcoin Volatility Index (BVX), a 30-day forward-looking measure of implied volatility. Rather than tracking price, the index is derived from real-time CME Bitcoin options order books to isolate market expectations and is published every second (7am-4pm CT).

CME says the new contracts will allow traders to invest or hedge against the future volatility of bitcoin, thus providing a new layer of risk management.

“As the digital asset complex continues to expand, Bitcoin volatility futures will be an important tool for market participants to better manage portfolio risk by directly trading volatility,” says David Schlageter, head of derivatives sales at Morgan Stanley.

Sui Chung, CEO of CF Benchmarks, adds, “The launch of bitcoin volatility futures contracts by CME Group marks another major step forward in the maturation of bitcoin as an asset suitable for investors of all stripes: from institutions to individuals.

“For years, the CME CF Bitcoin Reference Rate (BRR) has served as the benchmark spot price, allowing regulated derivatives, ETFs and ETPs as well as lending markets to flourish,” he continues. “The CME CF Bitcoin Volatility Index extended that infrastructure into a new dimension: forward-looking bitcoin volatility. With the launch of these CFTC-regulated futures contracts, we anticipate a similar flourishing of regulated financial products that will enable investors to more precisely harness the unique characteristics of bitcoin and express views on forward-looking sentiment and manage risks that have, until now, been difficult to implement.”