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All You Need to Know About TD Ameritrade’s Bitcoin Futures Offer

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A week after the CBOE Global Markets Inc. launched their Bitcoin futures contract, TD Ameritrade Holding Corp., USA’s largest online futures brokerage firm, will start offering CBOE’s futures contract to their brokerage clients on Monday (Dec. 18). According to the statement released by the SF-based brokerage firm, they firmly believe that the current Bitcoin market is “showing signs of adequate liquidity for the CBOE product.” J.B. Mackenzie, the marketing director for futures trading at TD Ameritrade, explained the company’s decision in the following way:

“Right now we are taking the same approach we did with the CBOE product, to wait and see how it goes. We want to watch that market open and become an orderly marketplace and see who the participants are in that marketplace. This is the same process we use with any new product. We want to see how the market reacts.”

Last Sunday, CBOE Global Markets Inc, launched their Bitcoin futures contract, just a week before rival CME Group Inc. In the first three hours of trading, nearly $30m in bitcoin futures changed hands, which was $20m shy of CME’s trading volume over the same period, making it the world’s second-largest exchange operator by market value.

How is TD Ameritrades offer different from other Bitcoin futures contract?

  1. TD Ameritrade’s investors are required to have a minimum balance of $25,000 in their accounts to trade Bitcoin futures, which is one and a half times more than what CBOE requires.  
  2. Higher initial margin requirement at 66%, which is 1.5 times CBOE’s margin. Therefore, to trade a single Bitcoin futures contract at $20,000, you will have to put up $13,200 as collateral. This translates to a lower leverage for investors when compared to the futures contract offered by CBOE and CME, which have 40 percent and 35 percent margin rates respectively.

Just a day before TD Ameritrade starts offering the Bitcoin futures contract, CME Group Inc. will also be introducing their own futures contract. Unfortunately, the CME futures contract will not be available to TD Ameritrade’s customers right away.

Aside from TD Ameritrade, electronic brokerage firm Interactive Brokers Group Inc. also announced earlier this week that it would be offering bitcoin futures under the ticker symbol “GXBT” on the CBOE Futures Exchange from Dec. 18 onwards. We can also expect some of the larger institutional firms like Morgan Stanley and JPMorgan to introduce Bitcoin futures contracts in the near future as well.

At the time of writing, TD Ameritrade’s shares were up 2.16% in extended trading.

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