CME Q3 Revenue Doubles Driven by BTC Futures, The Exchange Is Increasing Contract Limits for the ETF

Regulated platform CME Group reported its third-quarter profit more than doubling thanks to the approval of the exchange-traded funds (ETF) tied to CME Bitcoin futures seeing immense traction and trading in the futures exchange operators’ energy and interest rate products surging.

CME reported revenue of $1.1 billion and operating income of $614 million, while net income was $927 million for the third quarter.

The average daily volume of CME rose 14% from a year earlier to 17.8 million contracts. Its Bitcoin futures volume meanwhile increased by 170% versus the Q3 of 2020.

“The launch of ETFs based on CME’s bitcoin futures is validation from the industry of what we’ve known for some time, that CME bitcoin futures are the leading source of bitcoin price discovery in the industry,” Sean Tully, global head of financial and OTC products, said on a call with analysts.

In October, so far, the average daily volume for CME’s bitcoin contracts is up 57% compared to September, to over 12,000 contracts or over 60,000 equivalent BTC worth a record $3.5 billion per day.

Ether futures are also off to a good start since their launch in the first quarter of this year.

Additionally, CME Group is increasing the spot position limit on the amount of Bitcoin futures contracts that the ETF can own.

ProShares Bitcoin Strategy ETF (BITO) was the first Bitcoin ETF listed on the NYSE on Oct. 19 and became the fastest fund to amass $1 billion in assets. A few days later, Valkyrie Funds also launched its Bitcoin ETF.

Both the funds invest in bitcoin futures contracts listed on the CME Group and do not directly invest in cryptocurrency.

Currently, there is a strict limit of 2,000 spot futures contracts that ETFs can own, but the heightened interest in Bitcoin ETFs has caused the CME to increase this limit to 4,000 in November, said Terry Duffy, chairman, and chief executive of CME Group.

“We feel very confident from a risk perspective that we are not being reckless in any which way, shape, or form, and this has been vetted by our entire team and with the regulators. We’ve filed for those changes as we are confident that the product is mature enough to increase the size of the limit.”