CFTC provides recommendations on trading cryptocurrency derivatives

22 May 2018

This week the U.S. Commodity Futures Trading Commission (CFTC) published its notice with recommendations to stock exchanges and clearing houses, which have intentions to start listing cryptocurrency-based derivatives.

The joint statement was prepared by the CFTC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) with a view to bring ‘regulatory clarity’ for the companies on the matter related to such security instruments.

In the notice the regulator covered such aspects as market monitoring, large trader reporting, risk management and administration, as well as coordination with the members of CFTC, emphasizing that these issues are ‘key areas’ requiring specific attention.

Brian Bussey, director at DCR, noted that the new recommendations are aimed at providing assistance to the market players to develop their risk management policies dedicated to cryptocurrency-related security products. He added that with the new recommendations, market participants will have a proper reference point for developing their management processes, when it comes to launching such types of financial products.

Interestingly, the recommendations are published just a week after CME Group, a Chicago-based financial market company operating an options and futures exchange, announced in the official press-release that it will be publishing an Ether reference and a real-time Ether-Dollar index in a joint effort with its partner Crypto Facilities, a London-based FCA-regulated digital asset exchange specializing in bitcoin futures. There was no statement made by CME Group about its plans to launch Ether futures, however, some speculations suggest that there is a possibility.

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