Eurex Launches Bitcoin Index Futures

by James · March 22, 2023

Eurex will launch Bitcoin index futures as CME Group’s suite of cryptocurrency futures had its best trading day of the year on March 13.

Deutsche Börse’s derivatives arm said in a statement that it is the first European exchange to offer Bitcoin index futures, which will begin trading on April 17, 2023. Eurex described the launch as an important milestone in its ambition to offer safe and reliable access to cryptocurrencies in a regulated market environment.

The new contract complements Eurex’s already listed BTCetc ETN Futures with physical delivery and has been developed in partnership with FTSE Russell, the London Stock Exchange Group’s index business, and Digital Asset Research, a provider of institutional-grade digital asset data.

Arne Staal, FTSE Russell

Arne Staal, chief executive of FTSE Russell, said in a statement: “Our digital asset indices use the same rigorous index policy and governance framework used with our equity and fixed income products. Perhaps most importantly in this market, in partnership with DAR, we have created a survey methodology to set a standard for the inclusion of digital assets and stock indices, which offer consistent prices that reflect the real investable market to the investor community.”

The launch comes as cryptocurrency prices have rallied, with US exchange group CME Group having the best trading day of the year for its suite of cryptocurrency futures.

As cryptocurrency prices surged, CME Group’s suite of cryptocurrency futures had its best trading day of the year on March 13. Trading volume exceeded 90,500 contracts, representing over $4.6 billion in nominal value. pic.twitter.com/F6EPd8GmUZ

— CME Group (@CMEGroup) March 15, 2023

Counterparty risk is a key concern for market participants as of late Acuiti Crypto Derivatives Management Insight Report. This quarter’s report is based on a survey by the Acuiti Crypto Derivatives Expert Network, a group of over 70 senior executives from asset managers, hedge funds, sell-side firms and proprietary trading groups active in crypto derivatives trading.

Almost half of the network, 47%, said they were very concerned about counterparty risk compared to 31% for operational risk, 13% for liquidity risk and just 6% for market risk. The report also found that three-quarters of the network were either fairly or very optimistic about an improvement in digital asset markets over the next three months.

Will Mitting, founder of Acuiti, said in a statement: “This quarter’s report demonstrates the resilience of the crypto derivatives market as it recovers from an extremely challenging year.”

Record trading volume

Increased volatility following the recent failures of Silicon Valley Bank and Signature Bank in the US has led to record high trading volumes on exchanges.

On March 13, 2023, CME Group reported its highest daily volume ever, with 66.2 million contracts traded.

Exactly: CME Group reaches daily trading volume record of more than 66 million contracts, driven by interest rate and equity index complexes.

— CME Group (@CMEGroup) March 14, 2023

Terry Duffy, chairman and CEO of CME Group, said in a statement: “The importance of risk management cannot be overstated. Our futures and options on futures products are doing what they were designed to do, as investors seek to protect their portfolios amid heightened volatility.”

The CME also hit the following daily highs for its fixed income and equity index composites on March 13:

Record interest rate futures and options volume of 41,904,908 contracts
Record SOFR futures volume of 15,548,464 contracts
Record SOFR option volume of 5,974,351 contracts
Record 30-day Fed Funds futures volume of 2,258,410 contracts
Record high stock index futures and options volume of 17,805,973 contracts
Record micro E-Mini S&P 500 futures volume of 2,895,971 contracts
Record E-Mini Russell 2000 futures volume of 1,053,544 contracts
Record micro E-Mini Dow Jones futures of 607,411 contracts

On March 13, 2023, the Intercontinental Exchange also had record levels of trading activity with 14.45 million futures and options contracts traded during the day. This broke the previous record set on March 12, 2020 as the market reacted to the outbreak of the COVID-19 pandemic.

ICE said the financial futures and options portfolio hit a record, with a record 10 million contracts traded compared to the 2023 average daily volume of three million contracts

Euribor, the benchmark contract for managing short-term euro-related interest rate risk, had a record 5.49 million futures and options contracts traded, surpassing the record previously set on 29 May 2018. SONIA, the benchmark contract for UK interest rate risk, also had a record 1.17 million futures and options contracts shopped.

Chris Rhodes, president of ICE Futures Europe, said in a statement: “The record level of trading activity that took place in ICE’s markets on March 13 reflects a sudden shift in risk sentiment in US regional bank stocks, which collided with interest rate expectations priced for central bank tightening. These volumes reflect a flight to liquidity, demonstrating the reliability of futures markets as a risk management tool.”

ICE’s equity index portfolio also reached a record 2.9 million futures and options contracts traded on March 13, 2023, compared to ADV of 423,000 contracts.

The New York Stock Exchange, also owned by ICE, also reported that all-day NYSE volume and closing auction both set records for March 17, 2023.

Record check ☑️
On Friday, all-day NYSE volume was a record with 4.1 billion shares total.
The NYSE closing auction also set a new volume record on Friday’s rebalancing, trading more than 2.7 billion shares. pic.twitter.com/D1RxvoJq2p

— NYSE 🏛 (@NYSE) March 20, 2023

Michael Reinking, senior market strategist at the NYSE, said in a report that volumes were expected to be very large March 17 due to the quad-witch expiration and the quarterly index rebalancing.

“It was a record day with 4.1 billion shares traded on the NYSE,” Reinking added. “The auction was also the largest in history with 2.72 billion shares traded, 12% above the previous record set in December 2021.”