In this conversation, we talk with Paul Rowady, who is the Director of Research for Alphacution Research Conservatory. Paul has a deep background in capital markets, derivatives, and the macro structure of the industry. He has been uncovering the transformation of that structure with data driven analyses, making visible the economics of market makers like Citadel and retail order flow aggregators like Robinhood. This is a rich discussion of what trading stocks is really like. And make sure to check out Alphacution.
In March the Securities and Exchange Commission denied approval for a Bitcoin ETF by the Winklevoss twins because they said too many bitcoin markets were unregulated; with recent futures markets at the CBOE and CME starting there is new hope for ETF approvals; previous filings for ETFs are now being refilled and newer ETFs are being filed as recently as late last week; there has been similar products in Canada and Switzerland with both trading at premiums. Source.
As the CBOE bitcoin futures product goes live there are lingering questions with the exchange where they will base their pricing; Gemini is run by the Winklevoss twins but has had a number of issues including low volumes and system outages; Gemeni is currently ranked 14th according to CoinMarketCap; while well connected because of the Winklevoss twins critics worry they can be potential targets for price manipulation; as the futures market goes live there will be a lot of interest to see how this plays outs. Source.
The Futures Industry Association, the main futures industry group, is sending a letter to the CFTC expressing concerns over bitcoin futures; the FT saw a draft of the letter and it states that they did not allow for proper public transparency and input; futures brokers are concerned over holding more risk and have expressed concerns to the FT that they will not immediately clear the products. Source.
The cryptocurrency space is a space we believe in,” CBOE’s chief operating officer told analysts in a call on Tuesday according to the FT; they also noted that the CBOE is in talks with the CFTC to offer futures on bitcoin; this move follows what the CME said last week that it planned to add bitcoin as well. Source.
CBOE CEO Edward Tilly told the Financial News that recent criticism about bitcoin futures was “uncalled for”; “I think letters like that and cheap shots to our regulator, the CFTC, are uncalled for to make it seem this was an overnight self-certification without the proper amount of CFTC involvement,” explained Mr. Tilly; he explained that the Options Clearing Corporation clears the contracts for the CBOE and was comfortable with their decision of bitcoin. Source.
Bitcoin futures debuted on Wall Street Sunday by the CBOE and some of the biggest banks are unsure whether or not to offer them to clients; JPMorgan Chase and Citigroup are playing a wait and see game; some firms are excited to get started though they are hesitant to open discuss it as they risk potentially contradicting previous statements by their CEOs; the volatility is the biggest concern for banks as they just are not comfortable with the wild swings. Source.
The CBOE will launch bitcoin futures on Sunday December 10th and said that trading will be free for the first month; “We are committed to encouraging fairness and liquidity in the bitcoin market. To promote this, we will initially offer XBT futures trading for free,” commented Ed Tilly, Chairman and Chief Executive Officer of CBOE; CBOE’s bitcoin futures will trade on CFE un the ticker XBT. Source.