Trader Paul Duffy signals a trade in the S&P futures pit at the CME group in Chicago, September 13, 2012, after the Federal Reserve launched another aggressive stimulus program on Thursday, saying it will buy $40 billion of mortgage-related debt per month until the outlook for jobs improves substantially as long as inflation.

  • CME Group and CBOE set to launch bitcoin futures later this month.
  • Futures Industry Association (FIA) complains that there hasn’t been proper industry consultation on the launch.
  • Clearinghouses that will guarantee futures are worried they will carry all of the risks, FIA says.
  • Bitcoin’s price regularly moves 10% in a day, meaning exposure is not trivial.

LONDON — The trade body of the futures, options, and derivatives markets is concerned that not enough thought has gone into the potential risks posed by the introduction of bitcoin futures contracts.

CME Group, the world’s biggest exchange operator, announced plans to launch bitcoin futures contracts in October, effectively letting institutional investors bet on the price of bitcoin. Rival CBOE announced bitcoin futures soon after and both products are set to launch later this month. Nasdaq is also thought to be planning a similar product for the new year.

The Futures Industry Association (FIA) warned on Thursday that not enough has thought has gone into these products and the risks they pose to financial stability.

FIA CEO Walt Lukken said in a letter to Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo that there has not been “proper public transparency and input” from industry over the products.

CME and CBOE are both “self-certifying” their products, meaning they are launching without the official blessing of the CFTC. Lukken said: “We believe that this expedited self-certification process for these novel products does not align with the potential risks that underlie their trading and should be reviewed.”

Lukken said the clearinghouses that are members of the FIA are worried about their potential exposure to these new products. Clearinghouses sit in between two trading parties and guarantee derivative contracts in the event one of the traders goes bust. These intermediaries are meant to stop a domino effect of bust contracts that could Read More Here