It's a pretty big brake from the point of view of institutional investors. If none of my brokers offer access I simply can't trade it - it stops volume going through the futures.

Futures volume will drive volume in the underlying if only as Sneaky Sneaky People attempt to arbitrage using the hilariously manipulable price of bitcoin

Can you expand on that second paragraph?

Futures trading allows better price discovery, and generally improves the market for the underlying by contributing liquidity, especially from speculators.

(This is true for most commodities, but I think it could potentially be false for BTC depending on the way hedging transactions are logged and computed.)

> Can you expand on that second paragraph?

Futures stabilize the price of the underlying commodity.

The argument mostly boils down to that most rational actors will only tolerate a +/-N% change over the lifetime of a futures contracts

So the average future contract +/-N% (overall futures) roughly becomes the maximum volatility you can see out an asset over that duration. If it is exceeded people may stop trading futures, lowering the number of swaps, and by extensions trades of that asset. Providing a method to -let steam out- of a volatile system.

——

There are many examples against this (housing crisis 2008). The main example for is Chicago future exchange in the 70’s and 80’s http://www.econlib.org/library/Enc/FuturesandOptionsMarkets....

From the very link you posted, "Because futures contracts offer assurance of future prices and availability of goods, they provide stability in an unstable business environment."

I typo'd.

I was trying to show there was support for them providing stability, as for them failing to do this.

yep. FUD.

This reminds me of the time that other industry being disrupted pressed pause on the disruptor.

The article alludes to this at the end but doesn't talk the real reason head on. As these are leveraged products the banks are exposed to large swings in the contract price via various clearing mechanisms. So they are looking at the volatility and asking what happens when someone doesn't pay and we have to step in and cover them. BTC is a bit of a volatile underlying. If I was in clearing risk I would be worried too.

This is worth paying attention to though, the CFTC has traditionally had a lackadaisical approach to approving financial products, where other agencies are typically risk averse and out in much more rigor

This has led to Congress itself banning futures products

There are two futures contracts explicitly banned in the US, and another could easily ride into the tax reform bill

I know about cornering the onion market and the Onion Futures Act, what is the other banned futures contract in the US?

Box office futures

(Speculating on how many movie tickets would sell for a new movie, would be a great way to hedge and speculate)

This was shut down by congress right before it started, last minute addition to the financial reform bill while simultaneously getting the all clear from cftc

Being disrupted!

Lol