Cboe ‘Measured’ on Crypto

Shanny Basar

Ed Tilly, chairman and chief executive of Cboe Global Markets, said the US exchange is taking a measured approach to cryptocurrencies after launching and conducting the first settlement of bitcoin futures.

Edward Tilly, CBOE

Edward Tilly, Cboe Global Markets

Tilly spoke at a media briefing in London today. Last month the exchange launched the first regulated bitcoin futures and also the Cboe Gemini Bitcoin Futures Index, designed to replicate a constant one-month position in the new contracts.

He added that the launch of derivatives on the index and futures price formation and settlement is critical before the exchange looks to expand into other cryptocurrencies. On January 17 the exchange announced the successful cash settlement of the January expiry of the bitcoin futures.

Tilly continued that the goals for the exchange this year included migrating to Bats technology and increasing business globally. The  US options exchange acquired Bats Global Markets, the equities and foreign exchange marketplace last year and the merged company has been renamed Cboe Global Markets. In addition this week Cboe Global Markets was recognized in Hong Kong as an approved stock exchange.

Mark Hemsley, president of Cboe Europe Equities, said at the briefing: “Volumes in periodic auctions have taken off in January despite the delay in the double volume caps. Yesterday €300m was traded in periodic auctions.”

MiFID II, the regulation which came into force in the European Union this month, places double volume caps on equity trading of 4% of daily volume in an individual stock on any single dark venue as well as 8% of total average daily volume across all European dark pools. There are waivers for large-in-scale (LIS) orders and trading in auctions.

The European Securities and Markets Authority was due to announce the double volume cap calculations on January 12 but Esma has postponed the release until March.

Last year buyside firms were allowed to join Cboe LIS, a block trading platform powered by BIDS technology, which launched in 2016. Hemsley said: “There is a strong pipeline of buyside firms looking to join Cboe LIS.”

Fidessa said in its Top of the Blocks report for the week ending 19/1/2018 that last week was a record week for Cboe LIS, as it took a 17% share of the total number of block trades.

MiFID II also prohibits broker crossing networks and instead requires all firms committing capital to trades to use systematic internalisers. Cboe Europe Equities offers a mechanism for registered SIs to meet their MiFID over-the-counter pre-trade transparency requirements by disseminating SI quote data on the Cboe market data feeds; a single connection to multiple SIs, bilateral matching activities and trade reporting.

Hemsley added: “We have 24 firms using the SI quote service and we disseminated 100 million quotes yesterday.”

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