CBOE Teams Up with Gemini Trust for Bitcoin Data

CBOE Holdings Inc., which oversees the largest U.S. options exchange, has entered an agreement Gemini Trust, a virtual-currency exchange founded by the Winklevosses to use bitcoin market data. The move paves the way for Chicago-based CBOE to list bitcoin derivatives. The SEC denied the ETF in March—a decision that was appealed and is under review. The ETF would have been listed on one of CBOE’s stock exchanges. Pending regulatory approval, CBOE plans to launch futures on bitcoin by the end of 2017. The agreement also gives the company rights to use Gemini’s data to create and disseminate new indexes. CBOE’s relationship with Gemini marks a deeper foray into the world of digital currencies, which hit a market capitalization of $100 billion this year. U.S. equity options exchanges have been plagued by flatlining volumes in recent years. CBOE’s marquee product—the CBOE Volatility Index, or VIX—slumped to historic lows this year. Unlike global stock markets that have experienced extraordinary calm, digital currencies have oscillated wildly, likely making them alluring assets for derivatives traders. Should the plan win regulatory approval, investors would be able to make directional bets or hedge holdings. CBOE plans to first launch futures on virtual currencies with monthly expirations, said John Deters, chief strategy officer at CBOE. He also said that CBOE could consider options on virtual currencies.