Bitcoin traders have been reaping the benefits of arbitrage opportunities for many years now. In fact, there is a growing need for arbitrageurs and market makers, as they are the main providers of liquidity in any financial context. BitMEX, a platform specialized in trading Bitcoin derivatives, has integrated Bitcoin futures contracts with China stocks. This is a major step forward for the legitimacy of Bitcoin as a viable trading tool, both for investing and speculation across other markets.
Also read: Bitcoin Liquidity: Why Are we so Stingy?
It goes without saying that Bitcoin and traditional financial trading platforms could prove to be a very potent mix. The popular digital currency providers arbitrage opportunities to anyone in the world with an Internet connection. Traditional finance, on the other hands, is a vastly different creature, as not everyone can start trading futures on the China A50.
But that is no longer an issue, thanks to BitMEX and the Singapore Exchange. Especially this latter party deserves a bit of praise, as they launched a futures contract in USD on the FTSE China A50 Index a few years ago. If this foundation had not been available, BitMEX would not have been able to provide this type of functionality to its users today.
Investors have been jumping at the bit for an opportunity to go long or short on the Chinese market, and Singapore Exchange has provided them with exactly that opportunity. Particularly in these days of market volatility, there is plenty of liquidity to be found where these futures contracts are concerned.
BitMEX decided to jump on this opportunity and put Bitcoin in the mix of China A50 futures contract trading. By copying the contract terms of the same product offered by the Singapore Exchange, BitMEX opened the doors for traders with access to the SGX platform to diversify their trading strategies with Bitcoin. It hardly comes as a surprise to learn many Bitcoin users have been waiting for a hybrid futures contract option such as this one.
One thing to take into account is how the BitMEX China A50 futures contract will be open for trading 24/7. However, market makers will only be able to use the SGX futures price as BitMEX price during trading hours, which range from 00:45 AM to 6:00 PM in the GMT timezone. A detailed table of trading hours can be found here.
As most market makers will be well aware of, the China A50 futures market is not accessible 24/7. During the “ceased trading” periods on SGX, BitMEX users will be able to choose from other China ETFs to trade with. However, there will be a certain period every day where no product is being traded using the China A50 as an underlying. If all goes to plan, this gap will be filled in the coming years, assuming BitMEX futures contracts become the new leading market indicator by then.
Last but not least, BitMEX has come up with a plan to incentivize traders to provide liquidity on this new futures contract. Passive and makers orders will both be subject to a trading rebate, and makers will earn a 0.10% “commission” on the Bitcoin value of their orders on each individual fill.
What are your thoughts on BitMEX offering futures contracts linked to the China A50? Let us know in the comments below!
Images courtesy of Shutterstock, BitMEX
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