On Sunday Wall Street comes bitcoin, and in this regard, many senior officials of the world’s largest banks are already sleeping badly at night.
Before the start of the futures contracts for bitcoin, Cboe Global Markets Inc has only a couple of days left, and many banks are still considering whether to offer their customers, and if so, what mechanism should be developed for this. A number of executives of companies and traders have already reported in an interview that they are ready to join the trade in crypto currency, but most of their colleagues demonstrate a very cautious attitude, pointing to a list of problems and questions that remain unanswered. In addition, unprecedented in its scale jumps in bitcoin prices this week gave the new market an even more dangerous coloring.
Representatives of half a dozen of the largest companies interviewed on condition of anonymity answered that they did not want to make statements that contradicted the official position of the leadership, and some said it was too early to take a clear position on this issue. What troubles them the most?
The threat to soak up the reputation
Some industry leaders and company heads have branded bitcoin for months as “fraud”, “a synonym for a bubble” and “money laundering index”. And how then can they start offering their clients services for investing in an asset, which, according to their forecasts, should burst? What will happen if more private internal statements regarding such futures become public knowledge? So, for example, one of the high-ranking leaders from Wall Street privately gave beatkoin an unflattering definition of “sh * tcoin.”
Where to trade?
Bitcoin fans claim that this is a currency. In the Commodity Futures Trading Commission (CFTC) they consider it a commodity asset. The same opinion is held in the Goldman Sachs Group. Thus, it would be logical, if new contracts were traded on trading platforms of these markets. However, according to some bankers, stock markets are more used to dealing with mathematics, bitcoin dynamics are more reminiscent of the behavior of a volatile stock, and futures have some similarities with options.
When asset prices are stable, the life of banks is quite easy: they help the client buy or sell the asset, and then look for another customer who wants to make a reverse trade. However, bitcoin is too restless for banks. His course is capable of making large-scale fluctuations in a matter of minutes, and there is currently no established model for recording this in the company’s balance sheet.
In this regard, banks will clear new contracts, looking for investors to the relevant counterparty in the transaction. The task may not be easy. Some traders already say that many customers are interested only in sales. And this means that the life of bank clerks can turn into everyday torture: without a sufficient number of long positions, transactions will become expensive and inefficient.
Dangers of clearing
The Futures Trading Association published a letter this week that criticized the hasty actions of Cboe and CME, which are trying to bring new futures to the market without proper preparation and risk taking. The association, which includes the largest brokers in the derivatives segment, is afraid that the extraordinary volatility of the crypto currency may provoke defaults among investors during periods of large-scale price fluctuations. This will hurt the companies that are clearing.
Large bureaucratized banks will find it difficult to deal with the mechanics of these tools in the shortest possible time. According to unofficial sources, Goldman Sachs will first clear the contracts for bitcoins for certain customers, considering each transaction individually. Bank of America Corp. and Citigroup Inc do not plan to introduce clearing in the coming weeks. The management of other banks says that it will be included in the game when it is ready. That is, if they decide to take up this matter, then everything will go smoothly. But if the big players stay on the sidelines, will not the small, risk-averse companies benefit?