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The New York Stock Exchange Evaluates the idea of Launching a Financial Derivative Based on Bitcoin

Intercontinental Exchange (ICE), the mother company of the New York Stock Exchange (NYSE), is evaluating the idea of developing an online trading platform that would allow the big investors to purchase, sell or maintain cash flows based on the price of Bitcoin.

According to the information communicated by the New York Times, some sources provided the newspaper with confidential data about this project and added that the details regarding the platform are still unknown.

Nevertheless, the sources explain that the project ICE might be working on would not be similar to the Bitcoin futures contracts emitted by CME Group. The new project would provide immediate access to cryptocurrency cash flows, such as Bitcoin.

Intercontinental Exchange has already had conversations with other financial institutions with the goal of creating an operation that would allows the banks to use a new type of instrument through the swap contracts, such as the futures contracts were widely used in the traditional markets, which would facilitate the negotiations of cash flows or interest rates for the banks. This process would generate a regulated contract through which an exchange of financial derivatives would be realized and it would include Bitcoin in this case.

The option could be more complex than the immediate exchange of dollars for bitcoin, but the negotiation fits within the standards established by the United States Commodity Futures Trading Commission (CFTC), an entity that regulates the futures market in the US. This is the reason why the financial institutions could be more willing to realize this type of operations that they used traditionally for a type of speculative negotiation that include the supposition that an asset or good that are received in the future would have more value than the type of asset or good delivered in the future.

According to the same source, the plan of ICE could not be concretized due to the indecision of many of the large institutions from Wall Street to associate themselves with the virtual currencies sector. However, it is possible that these institutions change their mind due to the recent announcements of Goldman Sachs, a banking giant from the United States. The bank is at the verge of investing its own money in the development of financial contracts linked to the price of Bitcoin. Goldman Sachs plans on offering these contracts to its clients and the development team is already working on this new product.

Jeffrey Sprecher, the CEO of Intercontinental Exchange, in April said the cryptocurrencies were a tendency that could not be ignored and he did not reject the possibility for ICE to include cryptocurrencies in its futures contracts and offer them to the clients.

The plan made by ICE is similar to the project developed last year by Chicago Mercantile Exchange (CME) Group. The group announced the launch of futures contracts based on Bitcoin and created a new financial instrument.

There are other initiatives as well and it seems this is becoming a tendency on the financial market. For example, last month the Frankfurt Stock Exchange announced the launch of an app that would allow the users to invest in cryptocurrencies such as Bitcoin, Ethereum, Ripple and Litecoin. The app is called BISON.

Meanwhile in Ukraine, Ukrainian Exchange (UX), the main securities market in the country launched two futures contracts back in 2016, based on the price of Bitcoin and the Brent crude oil reference.

If IE manages to concretize its initiative, it would make Bitcoin available to an ample base of clients on a global level. This includes other big financial companies, since ICE is an international company operating six liquidation houses and 23 stock exchanges in North America and Europe. Among them is the New York Stock Exchange (NYSE).

This would also be a clear sign how the big financial consortiums from around the world are entering the emerging financial ecosystem, mainly because they are pressured by the growing interest of its clients to participate in the cryptocurrency market without the necessity to expose themselves to the fluctuations of the price of the main cryptocurrency, Bitcoin.

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