CME Group Launches Daily Price Benchmark for Ethereum

News and Analysis

CME Group announced new Ethereum price products that will provide users with an access to a reference rate and a real-time pricing index for the world’s second-largest digital currency.

One of the globe’s largest derivatives exchanges, CME Group, has formed a partnership with the UK-based cryptocurrency trading platform Crypto Facilities to launch an Ether Real Time Index and Ether Reference Rate, that will offer real-time ether price in USD and a daily benchmark price.

“The Ether Reference Rate and Real Time Index are designed to meet the evolving needs of this marketplace,” Tim McCourt, Managing Director and Global Head of Equity Products and Alternative Investments at CME Group, said in a press-release. “Providing price transparency and a credible price reference source is a key development for users of Ethereum.”

Prices will be calculated by the Crypto Facilities exchange and will be based on transactions and order book data from such major trading platforms as Kraken and Bitstamp. Both Ether Reference Rate and Ether Real Time Index are currently available on CME Group and Crypto Facilities websites and are set to launch on the CME Group Market Data Platform on June 4.

“Ether, the second largest cryptocurrency, experienced incredible adoption and growth in 2017, evolving into the leading blockchain for smart contracts,” said Timo Schlaefer, CEO of Crypto Facilities. “We are excited to be contributing to the strong community that has developed around the Ethereum network by providing a reliable reference rate and real-time Ether-Dollar price.”

The new rates will be monitored by the Bitcoin Oversight Committee, which will consist of Crypto Facilities, CME Group, as well as other cryptocurrency experts. They will “regularly review the methodology, practices and standards” in order to ensure the integrity of the reference rates.

The news follows last week’s announcement by Crypto Facilities that it was launching the first regulated ethereum futures contracts on its platform. According to Schlaefer, these futures will help to provide more liquidity to the ethereum token, which is currently the largest digital currency after bitcoin. Unlike trading with actual tokens, the new contracts will be regulated by the Financial Conduct Authority (FCA), what eliminates any regulatory or custodial risks.

“Bitcoin has gone through a process of maturation as a financial asset with a futures market in the past year. And Ethereum is following a similar path this year,” said Schlaefer.

As ForkLog reported earlier, the futures contracts for bitcoin were created by CME Group in late December 2017, a year after launching the CME CF Bitcoin Reference Rate (BRR) and the CME CF Bitcoin Real Time Index (BRTI).

CME Group, based in Chicago, is the world’s major derivatives marketplace, processing 3 billion contracts estimated at nearly $1 quadrillion annually. It is now one of the most diverse marketplaces, offering a wide range of benchmark products across all major asset classes.

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