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| February 18, 2018

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Will the wild stock market cause the Federal Reserve to slow interest rate hikes? And should it?

February 13, 2018 |

Financial markets delivered an unwelcome gift for Jerome H. Powell when he was sworn in last week as chairman of the Federal Reserve — a nosedive.

Triggered by fears of rising inflation and interest rates, the Dow Jones industrial average’s record 1,175-point plunge on Feb. 5 kicked off the worst…


L.A. Times – Business

Bitcoin Futures’ Future: Slow, Measured, No Mom and Pop Investors

February 5, 2018 |

Bitcoin Futures’ Future: Slow, Measured, No Mom and Pop Investors

Chicago Mercantile Exchange (CME) Chairman and CEO Terry Duffy explained in a recent interview how the decision to list bitcoin futures in the last quarter of 2017 wasn’t made as a result of light or transient causes. Instead, it was a deliberate effort to bring a proven technology to well-financed clients who will help it mature.

Also read: Market Risk Advisory Committee: Bitcoin Futures Self-Certification Works

CME’s Chairman and CEO on Bitcoin Futures

Scarlet Fu put it bluntly. Did the long practice of self-certification within the commodities exchange industry force out or exclude important players such as Goldman Sachs, for example, who were then saddled with bitcoin futures they clearly didn’t want, poisoning the well? Mr. Duffy, CME Chairman, answered immediately, “No.”

“I don’t think it does,” he continued, “because we spent a lot of time working with all our clients, talking to them about all our products, educating them about what we’re thinking. At the same time, there is a competitive issue out there that you want to be cautious of. The self-certification process is a big part of why [bitcoin] was put into place [so quickly].”

Bitcoin Futures’ Future: Slow, Measured, No Mom and Pop Investors
Terry Duffy

Questions of industry self-certification have popped up in frequency tandem to bitcoin’s giant price drop in recent weeks. It even became the central focus of the regulator’s first meeting of the year, as both CME and its crosstown rival, Chicago Board Options Exchange (Cboe), were asked to defend the tradition in direct contrast with standard stocks and their grueling gatekeeper, the Securities and Exchange Commission (SEC).

Mr. Duffy expanded his answer to Ms. Fu of Bloomberg, stating “[Our bitcoin futures product] didn’t have to go through a six month review (everybody could look at your intellectual property and do a copycat, lookalike product). We don’t have the same model as the Securities model. Ours is completely different. I think that the self-certification process works. We worked closely with our regulator. We worked more closely with them on this product because of the unique nature of this product.” 

Bitcoin Futures’ Future: Slow, Measured, No Mom and Pop Investors

Bitcoin is a Proven Commodity

Cboe was the first to list bitcoin futures, but CME’s week-later entrance into the ecosystem was largely seen as validation for the decentralized currency’s legitimacy and resiliency. CME is about as mainstream as finance can get. It owns several exchanges, and among its holdings is the Dow Jones index.

Remaining on the self-certification issue, Mr. Duffy defends the decision to list bitcoin. “At the same time, and I said this on my earnings call this morning, this product has been around for nine years. It’s not like it just showed up yesterday. Volatility [in traditional markets] has been low the last couple of years. What has not been low in volatility? It’s been bitcoin. People are clamoring for some kind of [volatility]. All the sudden this product becomes very much front page news. We’ve all been talking about bitcoin, and there’s been a lot of conversation about,” he explained. That conversation often turned to volatility and risk, and CME is not in the business of introducing more risk but, instead, managing it.

Bitcoin Futures’ Future: Slow, Measured, No Mom and Pop Investors

“We list [bitcoin futures], and we list it with a whole new group of standards. I said today on my shareholder earnings call I would not reduce any of those standards in order to make money on this product. I think it’s important we take a very slow approach to this, and make sure the product is rolled out properly.”

Ms. Fu asks indignantly, “So that high initial margin of 43% … under no circumstances would you lower that?” By way of perspective, commodity margins are usually single digits. Mr. Duffy’s answer is somewhat surprising, as it seems he really believes in bitcoin futures for the long term.

Protecting Ma and Pa

“That’s not what I said,” the Chairman and CEO corrected. “I would not do that in lieu of trying to get volume on it. I think the product needs times to mature. I think we’ve got to get more people involved in it, more commercials involved in this product. One of the reasons we have a five bitcoin per contract, versus our competitors having a one bitcoin contract, is I wanted to make sure I did not attract what is referred to in the business as the ‘moms and the pops’ trading it. I wanted to make sure people had a really good idea about what they’re getting into. I don’t want to attract a craze of people attracting to a marketplace when they’re not quite sure what they’re doing,” he cautioned. CME’s Chairman defended the high margin rates while the sot price tanked, stating

“Now, you look at the price of bitcoin. When we listed it, it was at $ 19,500 day one CME listed it. Today, it’s around $ 9,000 a bitcoin. We have a 43% margin, as you referenced a moment ago; we have had an over 50% decrease in that product. We are still holding 43% initial margin on that product today. It goes to show you the risk management processes we have in place for all of our asset classes but especially something like this when people were concerned about a quick break or a quick rally.”

Ms. Fu also asked about the prospect of listing other cryptos. Mr. Duffy pained a little at the question, “I’ll be honest with you Scarlet, we have not made a decision if we’re going to pursue other cryptocurrencies or not. I was very clear with the management of my company, and my board and my shareholders: this is new, this is controversial, but at the same time, if you look at the evolution of finance, everything was new, everything was controversial. We’re taking a very measured approach towards cryptocurrencies, and I will tell you right now we have no plans in the immediate future to bring out new cryptos right now,” he remarked candidly.

What do you think of Mr. Duffy’s comments? Let us know in the comments section below.


Images courtesy of Pixabay, CME.


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The post Bitcoin Futures’ Future: Slow, Measured, No Mom and Pop Investors appeared first on Bitcoin News.

Bitcoin News

Fallout From Apple’s Decision to Slow Phones Just Got Worse

January 31, 2018 |

US authorities are investigating Apple’s slowing of older iPhones, according to published reports. The Wall Street Journal and Bloomberg reported Tuesday that the Department of Justice and the Securities and Exchange Commission are investigating whether Apple violated securities laws. In December, Apple apologized for the slowdown after a blogger’s tests…
Newser

Solar panel tariffs threaten to increase customer cost and slow growth, but the industry remains optimistic

January 24, 2018 |

Fees on solar panel imports imposed this week by the Trump administration threaten to increase customer costs and cut solar energy growth by as much as 11% over the next five years, but the industry remains optimistic that the roadblock will be temporary.

The new tariffs probably will add about…


L.A. Times – Business

Will the #metoo movement speed up the number of women in leadership – or slow it down?

December 28, 2017 |

As the wave of sexual harassment allegations reached seismic proportions, one solution touted repeatedly has been the need for more women in power.

But will the current watershed moment lead to more women in top management roles — or could it actually hold them back? That’s a question getting more…


L.A. Times – Business

Slow Trading Day Results in Minor Market Dips

December 27, 2017 |

Losses in some big technology stocks led major US indexes mostly lower on Wall Street. Trading was quiet Tuesday as investors returned from the Christmas holiday, per the AP . The Standard & Poor’s 500 index slipped 2 points, or 0.1%, to 2,680. The Dow Jones industrials fell 7…
Newser

Fast-Fashion Chain Primark Is Slow Off the Mark in U.S.

December 25, 2017 |

Primark shuns online shopping and relies on supercheap prices to draw customers into its stores, a strategy that has won it a cultlike following across Europe. Americans have yet to warm to it.
WSJ.com: US Business

Horror movies top an otherwise slow box office Halloween weekend

October 29, 2017 |

George Clooney’s “Suburbicon” notched one of the most dismal wide-release debuts in recent years on a sluggish pre-Halloween weekend where the horror sequel “Jigsaw” topped all releases despite an underperforming debut.
FOX News

EU Inches Forward on Brexit but Says Progress Is Too Slow

October 21, 2017 |

European Union leaders signaled willingness to advance to the next phase of Brexit talks but said British Prime Minister Theresa May must first provide more details on how much the U.K. will pay the bloc upon leaving.
WSJ.com: What’s News Europe

Why Slow iPhone 8 Sales May Be Good for Apple

September 23, 2017 |

When new iPhones hit the market, they usually fly off the shelves. But with the two models that began selling Friday, there are signs demand is tepid—and some analysts say that could be a good thing for Apple Inc.
WSJ.com: US Business