Everything You Need to Know About Bakkt Bitcoin Futures |

After a year of waiting, Bakkt, the bitcoin futures exchange and digital assets platform from Intercontinental Exchange (ICE), the creator of New York Stock Exchange (NYSE), is ready to launch this month. The launch, slated for September 23, is expected to bring significant institutional investment into the crypto space. Here’s what we do know about Bakkt’s Bitcoin Futures so far 

What are Bitcoin Futures?

In a futures contract, the purchase or sale of an underlying asset at a predetermined price on a future date is specified. The transacting parties are obligated to fulfill their part of the contract, that is, buying or selling the concerned asset upon the expiry of the contract. With futures contracts, investors speculate the price movement of the concerned asset and hedge their risk. 

Investors can either choose to go for long positions where they agree to “buy” the asset at a specified price in the future when the contract expires, or they can opt for a short position, where they “sell” the asset at a predetermined price upon the expiry of the contract.

Bitcoin futures also work like the futures contracts of traditional assets. Investors get to speculate on the price of Bitcoin and earn from it without actually owning it. 

In the case of Bakkt’s bitcoin futures, the futures contracts are physically settled. Bakkt offers physical delivery of assets for futures contracts, but Bitcoin remains in their custody service, Bakkt warehouse instead of in the possession of the investor in a wallet. 

Bakkt Bitcoin (USD) Daily Futures Contract

This is a physically-settled daily futures contract for bitcoin held in the Bakkt Warehouse with the Trading Screen Product Name “Bakkt BTC (USD) Daily Future” and Trading Screen Hub Name “ICUS”. The commodity code is BTC and the contract size is 1 BTC. The minimum price fluctuation set is $2.50 per bitcoin or contract, and block trades may be executed at $0.01. There is no daily price limit for these contracts.

The contracts are available for trading on each Exchange Business Day on which commercial banks are generally open for business in New York. The listing cycle is of up to 70 consecutive Eligible Contract Dates. The final settlement will be in the form of physical delivery at the Bakkt warehouse.

The last Last Trading Day for a futures contract is 6:00 pm Eastern Prevailing Time on the Contract Date, while the last/only delivery day is the second Exchange Business Day after the Contract Date.

Exchange for Related Positions (EFRPs) EFRP transactions and Block Trades are permitted and the Block Trade Minimum is at 10 lots. The Exchange and Clearing Fees have been set at $1.00 per side for Screen Trades and $1.60 for Block, Crossing Order, and EFRP trades. The daily trading window is from 4:58 to 5:00 pm EPT. The position limit is 100,000 lots in any Contract Date and all Contract Dates combined.

Bakkt Bitcoin (USD) Monthly Futures Contract

This is a physically-settled monthly futures contract for bitcoin held in the Bakkt Warehouse with the Trading Screen Product Name “Bakkt BTC (USD) Monthly Future” and Trading Screen Hub Name “ICUS”. The commodity code is BTM and the contract size is 1 BTC. The minimum price fluctuation set is $2.50 per bitcoin or contract, and block trades may be executed at $0.01. There is no daily price limit for these contracts.

The listing cycle is of up to 12 consecutive contract months. The final settlement will be in the form of physical delivery at the Bakkt warehouse.

The Last Trading Day of the futures contract is the second business day prior to the Delivery Day for the contract month and the Last/Only Delivery Day is the third Friday of the contract month. 

Exchange for Related Positions (EFRPs) EFRP transactions and Block Trades are permitted and the Block Trade Minimum is set at 10 lots. The Exchange and Clearing Fees have been set at $1.25 per side for Screen Trades and $1.85 for Block, Crossing Order, and EFRP trades. The daily trading window is from 4:58 to 5:00 pm EPT. The position limit is 100,000 lots in any Contract Month and All Months combined.

Margin Details for BTC and BTM

In terms of outright margin, the hedge initial requirement for both BTC and BTM has been set at $3900, whereas the speculative initial requirement for both types of futures contracts is at $4290.

The inter-month add ons rates have been announced as well. For both BTC and BTM, the hedge rate is $400 to $1000. The speculative rate is $440 to $1100. 

More details on the Bakkt daily futures contracts and monthly futures contracts are awaited. 

The post Everything You Need to Know About Bakkt Bitcoin Futures appeared first on Coingape.

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