In the lead up to Dec. 10 last year, there was a massive crypto rally that many feel was catalyzed by the announcement that Chicago Board Options Exchange (CBOE) would be launching Bitcoin futures.
They were heralded as a melding of the crypto investment space and the traditional spheres. Now, those in Wall Street would be able to enter the Bitcoin space with a familiar product.
A few months after the futures have launched, it is probably a good time to check in and see how this product has worked out at CBOE.
Dennis O'Callahan, CBOE’s director for product development, spoke to Bitcoincloud recently at the QUANT Conference in Venice, about how things have been going in the few months since futures have been available through CBOE.
Bitcoincloud: Hi Dennis, thanks for taking the time. Let’s start at the beginning, what was it that made you decide to pursue Bitcoin futures as a potential product for CBOE?
Dennis O’Callahan: I am in product at CBOE, so my sole role at this company is to develop products and bring products to market. We monitor all spaces, including the cryptocurrency space, and we have been looking at it since about 2014 or so, looking for ways that we could get involved in this market. We have been looking at the Blockchain itself, and cryptocurrencies themselves, so we have been looking for a long time, but never found a way that we were comfortable with until last year in March, when we looked at this particular design that we have. It is still an ongoing process.
CT: You were not the only ones to come out with Bitcoin futures in December, but you were the first, how did it come about that you launched at a similar time as CME, and have you kept much of an eye on their product?
DO: We had been talking to our regulators, the CFTC, since about May or June of 2017. So we have been in the process for quite some time. In August we put out a press release that we were exploring this market, and at that time we still had not heard of any other exchanges involved in this market, so we were well on our way to having this product before we even heard that CME was looking at this space. We were the first to market because we had been working on it for quite some time. We are happy with the way our product is running and we are very comfortable with it, but we do look at the competition. Still, we are satisfied with the product design.
Regulations and hype
CT: What about that regulatory minefield that is often associated with cryptocurrencies, how was it negotiating the rules in order to get a product out that was totally above board?
DO: The CFTC want the same things that we want, we want a fair and orderly market, and we want a market that is not open to manipulation or anything untoward. They asked us questions, very good and insightful questions, they challenged us on points and we answered their questions. It was a process but we are very comfortable with their knowledge of the market. It probably took longer than most products which we can just certify and launch, we actually went to them to make sure that they were comfortable with the product before we were determined to launch.
CT: With the massive hype leading up to the launch of futures, have they matched that now, and, are you happy with the product, would you consider it a success?
DO: We have seen a lot of interest, especially retail interest, by some retail firms. We are trading almost 7,000 contracts per day, so we are very happy with the progress of this product. We like what we have done, and we are pleased with the progress the product has made.
Our goal is to make sure we are doing everything we can to make the product as accessible to users as possible. We believe we are heading in that direction, so we are pleased with the results so far.
Monitoring other markets
CT: As the director of product development, what else have you got your eye on when it comes to the cryptocurrency market, and different products that are out there. Is there any inside scoop you can give us on what CBOE has its eye on?
DO: Being in product development our task is to look for new products all the time, so we are constantly evaluating that market, and we are evaluating other cryptocurrencies too, among other items. But we have seen how Bitcoin has worked, so we are definitely monitoring other markets to make sure that the infrastructure and everything is in place in case we want to pursue other cryptocurrencies.