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Nasdaq Decides To Offer Futures In 2018 For Bitcoin

Nasdaq, the New York stock exchange has decided to hop on the Bitcoin bandwagon by announcing that it will by offering Bitcoin futures contracts in 2018. According to an unnamed source familiar with the dealings, Nasdaq will be introducing US derivatives contracts linked to Bitcoin by second quarter of 2018.

The contracts will be traded on its NFX market. Nasdaq’s plans came after CME Group and CBOE Holdings announced their Bitcoin futures this year. Bitcoin set record highs this week after it topped $11,000 on Wednesday, just hours after it hit $10,000. Bitcoin is by far the most popular cryptocurrency in the world and was able to increase its value more than 10-fold in the last 11 months.

Despite the volatility of its price, the exponential growth of Bitcoin drove markets and financial analysts crazy. In August 2017, CBOE Holdings in partnership with Gemini trust, announced their plans to offer cash-settled Bitcoin futures towards the end of 2017 or early 2018. CME Group, the world’s largest derivatives exchange announced in October that Bitcoin futures will be listed on their exchange, citing increasing client interest and evolving cryptocurrency markets.

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When the three exchanges offer Bitcoin next year, Nasdaq is at a slight disadvantage since it is a comparatively smaller player in the futures market. To set itself apart from CBOE and CME, Nasdaq will be working with New York-based money manager VanEck Associates Corp in developing a futures contract, pending clearance from the Options Clearing Corporation (OCC).

VanEck will be supplying Nasdaq with pricing data from 50 sources. This sets Nasdaq apart from CME’s plan to pull from four sources and CBOE’s plan to pull from Gemini Trust. When it comes to handling hard forks, Nasdaq also has a unique strategy. If Bitcoin splits into two competing products, Nasdaq says that both sides of the fork will go to the index for one day, before the spin-off is reinvested into the original half to come up with an adjusted value. This will make the transaction more seamless for traders.

This is not the first time Nasdaq is working with Bitcoin. In 2015, Nasdaq offered an exchange-traded note based on the Bitcoin cryptocurrency over at its Stockholm exchange. Currently, Bitcoin trades on virtually unregulated markets and it will be an interesting move to see heavily regulated markets such as Nasdaq, CME and CBOE promoting Bitcoin. Many financial analysts believe that once these regulated exchanges start offering Bitcoin, it could strengthen Bitcoin’s reputation which has received a lot of flak in the past.


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