ICE Announces Hedge and Speculative Requirements for Bakkt’s Bitcoin Futures Contracts
On September 9, 2019, a post on the official website of the Intercontinental Exchange or ICE as it is popularly referred as concerning Bakkt’s futures contracts attracted the attention of one and all in the crypto world.
ICE announced the pre-requisite speculative requirements for the customers interested in Bakkt Bitcoin futures trading contracts. The post clearly mentions the initial deposits the customers will have to make to qualify for trading in its futures products.
Futures Margin Requirements Details:
Based on the official notice, as a part of the initial hedge requirement, the customers will have to maintain a deposit of $3,900 for both, monthly as well as daily futures contracts on the platform. For both the contracts, the initial speculative requirement is prophesied to be $4,290.
The reputed Director of Research at TradeBlock, John Todaro, described the initial margin requirements for the future contracts as “the amount of assets (collateral) that need to be pledged in order to open a position.”
He further informed that the primary hedge requirements are for the customers who have exposure to Bitcoin in their wallet accounts. The spearhead stated:
Speculative requirements are for those accounts that are speculating on the price move on Bitcoin through futures contracts. The CFTC and other regulating agencies have rules in place to protect futures markets from excessive speculation, which can lead to deviant price fluctuations, volatility, etc.
About Add-Ons:
Bakkt’s official post gave clear requirements for the monthly rate add-ons for the customers. Likely, as its initial hedge and speculative ratings vary, the exchange’s inter-month add-ons too show a variation.
The inter-month add-ons for the hedge rate are slated between $400 and $1,000 for monthly as well as daily futures contracts while for the speculative rate the add-ons will stand between $440 and $1,100.
“As contracts trade over time, there then becomes a maintenance requirement in order to keep your position open,” said Todaro.
ICE Tuesday’s notice lies in alignment with the predicted margin rates given in a FAQ Bakkt which was published last month.
Bakkt is gearing up to launch its highly anticipated project concerning the futures contracts on September 23, 2019. Also, September 6 marked the starting of operations of deposition and withdrawal of Bitcoins from the Bakkt Warehouse.
Recently, Bakkt announced that the Bitcoin deposited in its Bakkt Warehouse is secured by a whopping $125 million insurance policy.
