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ICE to launch Bitcoin futures contract in Singapore on Dec 9

INTERCONTINENTAL Exchange (ICE) is planning to launch a Bitcoin futures contract on Dec 9.

The Bakkt Bitcoin cash-settled monthly futures contract will be settled against data from the physically delivered Bakkt Bitcoin monthly futures contract, it said in a press statement on Friday. The contracts will be in US dollars.

The new contract will be listed on ICE Futures Singapore and cleared by ICE Clear Singapore, which are regulated by the Monetary Authority of Singapore (MAS). This comes against the backdrop of MAS's new consultation paper on Wednesday, to allow the trading of derivatives, such as bitcoins and similar cryptocurrencies, on exchanges - including ICE - approved by the central bank.

“Our new cash-settled futures contract will offer investors in Asia and around the world a convenient, capital efficient way to gain or hedge exposure in Bitcoin markets,” said Lucas Schmeddes, president and chief operating officer of ICE Futures and Clear Singapore.

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The Atlanta-based exchange, which also owns the New York Stock Exchange, will still offer futures settled in physical bitcoins out of the US, and the launch will see the new cash-settled product traded in addition to the physically settled Bitcoin futures.

ICE Futures is the first of the four MAS-approved exchanges to announce the launch of a regulated futures contract for payment tokens such as Bitcoin. The Singapore Exchange (SGX) currently has no plans to launch payment token derivatives, it said in a previous email to The Business Times.

Asia Pacific Exchange (APEX) also has plans to list a payment token derivative, said Nelvin Toh, the senior vice-president of the legal, regulatory and compliance department of APEX.

"Our teams have already commenced product research and development, and will continue to calibrate our product specifications in close consultation with both industry players and the Monetary Authority of Singapore," he added.

MAS said on Wednesday that there is increasing demand from institutional investors for a regulated product to gain and hedge their exposure to these payment tokens. However, the central bank does not view payment token derivatives to be suitable for most retail investors to trade.

To underline the risks, MAS is setting a high bar for retail investors.

Come June 30 next year, retail investors will need to fork out more than institutional investors to trade in these derivatives. They will need to pay 1.5 times the standard amount of margin required for contracts offered by the approved exchanges, subject to a floor of 50 per cent of the contract value.