The North American Derivatives Exchange (Nadex) announces its plans on launching a Bitcoin binary options offering in early December, subject to filing with the CFTC.
Chicago-based, regulated online binary-options exchange Nadex is launching Bitcoin binary options contracts next month, according the company's November 24 announcement. The company is currently going under filing review from the US Commodity Futures Trading Commission (CFTC).
Nadex said the new offering is in response to a strong demand from retail traders. Like other binary options contracts, investors will have the ability to trade based on where they think the contract is heading, using either daily or weekly contracts. The Bitcoin binary-option contracts will allow the trading of price movements of the cryptocurrency, without the need to hold any Bitcoins.
"Bitcoin binary options are an exciting way to participate in the bitcoin phenomenon while limiting risk," said Nadex CEO Timothy McDermott. He added:
"Our innovative short-term contracts provide a way to trade in a transparent, regulated market where the trader’s exposure is known before any transaction is executed. This is especially valuable given the bitcoin price volatility that has often been experienced in the marketplace."
Nadex chose to list daily and weekly contracts with prices based on TeraExchange's Bitcoin index, TeraBit. The company stated that they made this decision because TeraBit is currently the only Bitcoin index calculated and administrated by a US CFTC-regulated firm.
TeraExchange President and Co-Founder Leonard T. Nuara stated:
"Since launching the TeraBit Index in September we have been approached by a wide array of financial services firms for this benchmark. By working with Nadex to launch its bitcoin binary options, we are thrilled to help make another regulated marketplace available to those looking to take directional views on bitcoin."
TeraExchange is a US-regulated Bitcoin swaps exchange for institutional participants. Its TeraBit Index employs a dynamic algorithm that compiles data on a real-time basis from a number of prominent Bitcoin exchanges.
On September 15, TeraExchange received regulatory approval from the CFTC and became the world's first regulated platform for Bitcoin derivatives with a spot Bitcoin index.
Earlier this month, the Swap Execution Facility (SEF) for Bitcoin, announced a partnership with Bitcoin security leader BitGo to provide greater security in Bitcoin derivatives trading.
The North American Derivatives Exchange is based in Chicago and targets retail traders. Nadex is part of IG Group, a global financial services provider with a market cap of over £2.2 billion as of October 2013.
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