- REUTERS/Scott Olson
- Cboe Global Markets’ bitcoin futures product launches Sunday.
- TD Ameritrade said it would provide its clients access to the market if it meets its standards.
- The firm wants to make sure the market has enough market makers, liquidity and volume.
“I’m not going to be watching football Sunday.”
Instead, JB Mackenzie, a managing director on brokerage TD Ameritrade’s futures and forex trading team, is going to be watching Cboe Global Markets’ launch of bitcoin futures. He told Business Insider the firm is taking a “wait and see” approach, but is ready to potentially dive into the market if the conditions are right.
As such, the necessary risk protocols are in place and the back-office is prepped.
“With every new futures product we want to see how the marketplace comes together,” Mackenzie said. “We want to make sure there are enough market makers, liquidity, and volume.”
Cboe announced Monday its futures market would be ready to go live Sunday at 5 p.m. CT. It will allow investors to bet on the future price of the red-hot coin, which is known for its spine-tingling volatility. On Thursday its price whipsawed up and down, trading at dramatically different prices on the main global exchanges. Still, its eye-popping gains have gripped the attention of Wall Street.
But Mackenzie said bitcoin’s unique nature as a “Wild West” digital gold doesn’t mean it’s getting any special treatment.
“We always take this approach,” he said. “We are going to wait at least a full-cycle to watch how trading goes in Europe and Asia.”
Morgan Stanley wrote it expected TD Ameritrade would be the first brokerage to get on board with bitcoin futures in a note out to clients Thursday.
“We see AMTD as most likely to lead the way, leveraging their leading technology platform and Forex offerings,” the bank said.
A spokesman from rival Charles Schwab told Business Insider the firm had “nothing to report” on bitcoin futures but that it was evaluating it actively. And E-trade did not respond to messages seeking comment. Bloomberg reported that Ally Financial would offer bitcoin futures to its clients.
Morgan Stanley identified some opportunities for brokerages offering bitcoin futures. The first – cross selling – is a common practice on the Street. Bitcoin futures could lure new customers, and brokerages could then push those customers other products.
“It could help expand the discount brokers’ customer base via market share gains and new trading customers, with potential cross-selling opportunities from new customers,” the bank said.
It could also allow boost firms’ brand.
“In terms of brand enhancement, brokers that offer Bitcoin futures trading may appear more cutting edge than competitors without it, attracting more clients,” the bank said.
Market watchers are excited to see how bitcoin futures play out Sunday, because they think it might open the door to more interest in the space. If all goes well Sunday, it could push brokerages into other areas of the bitcoin market.
“If it were 20 years ago, when the discount brokers were insurgents, we wouldn’t be surprised to see them as first movers in providing access to newly regulated areas of cryptocurrency trading,” the bank said. “Over time, they may well move beyond Bitcoin futures.”
Still, there are hurdles. Futures remain too fuzzy an area of finance for most retail investors to dive into and commissions tend to be much higher than that for the average stock trade.