CME Group (NASDAQ:CME), which specializes in offering derivatives and has previously shown an interest in Bitcoin by offering futures contracts on it, entered a partnership with Crypto Facilities to launch an Ethereum-related product.
“The Ether Reference Rate and Ether Real Time Index are designed to meet the evolving needs of this marketplace. Providing price transparency and a credible price reference source is a key development for users of Ethereum,” said Tim McCourt, a managing director at CME Group.
Crypto Facilities will do the majority of the grunt work to calculate the indexes using data from US-based Kraken and Luxembourg-based Bitstamp. Although people could view the reference rate on either partner’s website, it will only be available inside of CME’s real-time Market Data Platform next month.
The Chicago-based company’s move can be seen in the light of last year’s competition with Chicago Board Options Exchange (CBOE). Both companies ended up launching their futures contracts based on Bitcoin almost in lockstep.
After several rumors came through alleging that both CBOE and CME were planning to launch Ethereum and Litecoin futures, the race was on to see who gets to offer investors new products based on the larger of the two currencies.
A recent analysis by Moody’s shows that both exchanges were in the green after they launched their current Bitcoin-based products, which might have inspired CME to dip its fingertips into the Ether market.
This came after analysts believed that the exchanges were taking a risk in offering products on a cryptocurrency for whom the reference rate was calculated in a manner some would deem a sub-standard.
“CME and CBOE use different methodologies to determine the reference rate for Bitcoin futures, and they both rely on price discovery on newly-established cryptocurrency exchanges that have historically lacked meaningful regulatory oversight,” said Fadi Abdel Massih, an analyst at Moody’s.
It seems that by selecting well-established exchanges like Kraken and Bitstamp, CME is attempting to get a more adequate reference rate for Ether.
Perhaps, in the future, we might even see a futures contract on the coin.
This article appeared first on Cryptovest
