Eurex Adds Crypto Options
Posted by Colin Lambert. Last updated: October 20, 2023
Eurex is launching options on its FTSE Bitcoin Index futures in USD and EUR this week as it seeks to build out its cryptocurrency product suite.
The exchange launched the Bitcoin futures in April 2023 and says since then more than 50,000 contracts and $1.3 billion in notional have been traded.It adds that the options will enable investors to hedge their Bitcoin exposure and deploy new trading strategies, while providing access to the Bitcoin volatility risk premium in a regulated environment.
Eurex observes, with no apparent irony, that the cryptocurrency market has undergone a volatile period in the past year, arguing this has highlighted the need of a credible, safe, and regulated marketplace supporting the trading and risk management of digital assets. Institutional investors have shown broad interest for this new offering, based on a robust underlying index from our established index partner FTSE Russell, which is supported by Eurex Clearing, an AA-rated clearing house in Europe.
“Investors need robust trading and clearing safeguards when engaging in the crypto market,” reiterates Randolf Roth, member of the executive board of Eurex. “Eurex is a renowned regulated exchange, with a trusted platform and appropriate safeguards offering multi-asset class trading. With our extended crypto derivatives suite, we offer a trusted path to crypto.”
Shawn Creighton, director of index derivatives solutions at FTSE Russell, adds, “The right derivatives strategy starts with the right index, and our digital asset indices apply the same rigorous policy and governance framework used across our equity and fixed income products. FTSE Russell is excited to support this expansion of the digital assets’ ecosystem and it reinforces the importance of the vetting methodology we have created in collaboration with Digital Asset Research (DAR), that has set a standard for digital asset and exchange index inclusion.”
Both options and futures expire at the same time (17:00 CET) on the last Friday of the month. Alongside monthly and quarterly maturities, weekly expiring contracts will also be available to trade, Eurex says. FTSE Bitcoin Index (USD & EUR) is the reference rate for the final settlement for the underlying futures contracts, and is determined as the volume time weighted average of the FTSE DAR Digital Asset Price over the 15-minute period before the fixing time. Liquidity will be supported by orderbook and over-the-counter liquidity providers, it adds.