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> As investors rush into bitcoin, some big Wall Street banks are hitting the brakes. This metaphor sounds as if they're taking an affirmative step to halt the
by wyldfire 9y ago
> As investors rush into bitcoin, some big Wall Street banks are hitting the brakes.
This metaphor sounds as if they're taking an affirmative step to halt the "rush." But they're just not opting-in to this new futures offering. If we need to stick with this metaphor, let's try "some big Wall Street banks are coasting."
- joeschmoecad 9y agoyep. FUD.
- hndamien 9y agoThis reminds me of the time that other industry being disrupted pressed pause on the disruptor.
- Nursie 9y agoBeing disrupted! Lol
- ringaroundthetx 9y agoThis is worth paying attention to though, the CFTC has traditionally had a lackadaisical approach to approving financial products, where other agencies are typically risk averse and out in much more rigor This has led to Congress itself banning futures products There are two futures contracts explicitly banned in the US, and another could easily ride into the tax reform bill
- buttcoinslol 9y agoI know about cornering the onion market and the Onion Futures Act, what is the other banned futures contract in the US?
- ringaroundthetx 9y agoBox office futures (Speculating on how many movie tickets would sell for a new movie, would be a great way to hedge and speculate) This was shut down by congress right before it started, last minute addition to the financial reform bill while simultaneously getting the all clear from cftc
- sseveran 9y agoThe article alludes to this at the end but doesn't talk the real reason head on. As these are leveraged products the banks are exposed to large swings in the contract price via various clearing mechanisms. So they are looking at the volatility and asking what happens when someone doesn't pay and we have to step in and cover them. BTC is a bit of a volatile underlying. If I was in clearing risk I would be worried too.
- deleted 9y ago[deleted]
- Ntrails 9y agoIt's a pretty big brake from the point of view of institutional investors. If none of my brokers offer access I simply can't trade it - it stops volume going through the futures. Futures volume will drive volume in the underlying if only as Sneaky Sneaky People attempt to arbitrage using the hilariously manipulable price of bitcoin
- minhaz23 9y agoCan you expand on that second paragraph?
- IncRnd 9y ago> Can you expand on that second paragraph? Futures stabilize the price of the underlying commodity.
- valarauca1 9y agoThe argument mostly boils down to that most rational actors will only tolerate a +/-N% change over the lifetime of a futures contracts So the average future contract +/-N% (overall futures) roughly becomes the maximum volatility you can see out an asset over that duration. If it is exceeded people may stop trading futures, lowering the number of swaps, and by extensions trades of that asset. Providing a method to -let steam out- of a volatile system. —— There are many examples against this (housing crisis 2008). The main example for is Chicago future exchange in the 70’s and 80’s http://www.econlib.org/library/Enc/FuturesandOptionsMarkets.html http://www.econlib.org/library/Enc/FuturesandOptionsMarkets....
- IncRnd 9y agoFrom the very link you posted, "Because futures contracts offer assurance of future prices and availability of goods, they provide stability in an unstable business environment."
- 9y ago