CME Group Inc. expects its recently introduced bitcoin futures product to be a "slow grower," Chairman and CEO Terrence Duffy said.
"This is very much a walk as we go through this, not a run," Duffy said on a Feb. 1 fourth-quarter 2017 earnings conference call.
About six weeks after trading kicked off, CME is seeing about 1,000 contracts of the product traded daily, with 1,500 in open interest. But bitcoin futures account for a mere fraction of the company's total trading activity, particularly when compared with other new futures products, which in some cases see upwards of 50,000 contracts traded daily, Duffy said.
Interest in the product has varied so far, with about 32% of the trading volume coming from outside of the U.S., CME Global's head of financial and over-the-counter products, Sean Tully, said on the call. The exchange has seen buy-side companies, sell-side companies, retail investors and proprietary trading companies all actively trading the product, he said.
Duffy cautioned that the product was not meant to attract small retail participants. "That's not something that we wanted to be a part of," he said.
A week before Duffy's comments, Nasdaq Inc. President and CEO Adena Friedman reportedly said the exchange operator is interested in developing a cryptocurrency-focused product designed for longer-term investments.
Cryptocurrency-tied products have come under fire in the first few weeks of 2018 as regulators from the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have expressed concerns over digital currencies and the distributed ledger technologies behind them.
CME has continued to work with the CFTC since bitcoin futures launched on its exchange, said Duffy, who added that the burden of evaluating the products' impacts lies also on the exchange.
To try to assure investors that its product was safe, CME implemented higher margins and velocity and stop functionalities that mimic what might be seen on an equity market, Duffy said.
"We will not do anything in the near term that we think could increase the trade at the point of introducing additional risk to the system," he said.
