The Chicago Mercantile Exchange (CME) is expanding its crypto offerings with spot-quoted futures, now including Solana (SOL) and XRP. In this video, we explain what spot-quoted crypto futures are, how they differ from traditional futures, and why this is a major milestone for institutional crypto adoption.
Whether you're a trader, investor, or crypto enthusiast, this update is essential for understanding the next phase in crypto futures trading.
Learn more about Cryptocurrency futures and options:
https://www.cmegroup.com/markets/cryptocurrencies.html
Learn more about spot quoted futures:
https://www.cmegroup.com/articles/faqs/faq-spot-quoted-futures.html
Disclaimer:
The content here is for informational purposes only and should NOT be taken as legal, business, tax, financial or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.
Investing and trading is a high risk activity and should be approached with caution. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information contained on this Website is for entertainment purposes only and is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.
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00:00:00:00 - 00:00:26:24
What's up traders Anthony Crudele here and welcome to the Futures Radio Show podcast. Today we're diving into the launch of Solana and XRP futures with Tim McCourt, global head of equities and effects products at CME Group. We'll discuss why CME chose to rollout both full size and micro contracts simultaneously. What's driving demand for these two tokens, and how they fit into the broader growth of crypto futures?
00:00:27:01 - 00:00:52:19
Plus, we'll break down Spark Quarter Futures, a brand new way to make futures pricing easier to understand and more accessible to retail traders. Let's get started. This podcast is brought to you by CME Group. Whatever the obstacles, CME Group provides the tools that global market participants need to manage risk and capture opportunities. With 24 hour access to futures, options, cash and OTC products across all major asset classes.
00:00:53:00 - 00:01:17:15
You can drive your trading strategy forward with confidence and precision. CME Group where risk meets opportunity.
00:01:17:17 - 00:01:48:14
Tim, welcome back to the show. Great. Thanks, Anthony. Always good to be here. Glad to be back. A lot to talk about today. Solana XRP and spark coated futures. Three big launches. And also what I find interesting is with the Solana and XRP, you're launching a full size contract and a micro contract at the same time. So I'd like to probably get into how that looks with new product launches, because I think that's somewhat new for you guys potentially.
00:01:48:14 - 00:02:15:10
But we'll start off with salon and XRP. What was the primary reason and driver to launch these two products? Yeah, when we look at the launch of Solana and XRP futures here at CME Group, the real motivation as a lot of our products here at CME Group was this was in response to clearly articulated customer demand. And then when we look at cryptocurrency, be hard to deny what's going on in the marketplace.
00:02:15:12 - 00:02:39:09
We've certainly entered a new era of cryptocurrency with respect to the projects that are coming online. How firms and clients of ours are figuring out how all of these things work in their operation, the new products, they're looking at, their trading strategies. And when we look at the success we've had in Bitcoin and Ether over the years in cryptocurrency at CME Group, these are some of the next, you know, logical steps for us.
00:02:39:09 - 00:03:04:08
When we look at the market cap of the underlying tokens, how they were traded in the spot market. It really was with a strong use case and strong demand from clients. And to your point, I think what's interesting, as you know, us launching both regular size and micro size contracts at the same time really speaks to there. There's a wide range of use cases, both from an institutional perspective to the individual retail trader.
00:03:04:12 - 00:03:25:17
We're looking at the ETFs using our futures not only as the underlying, but also it's a key ingredient for the ETF market makers. Some of the synthetic create redemption processes that are happening to enable the success of the ETF ecosystem. So all these things are really going hand in glove. So it makes great sense for us to introduce both sides flavors to the marketplace.
00:03:25:17 - 00:03:57:10
So they have more precision and more tools at their disposal to manage their risk and to access these markets. So immediately what comes to mind for me, Tim, when I think about launching the full size contract, along with the micro contract, tons of demand, that's obviously, to me the first thing that comes to mind. And I guess the question is, is this the first time you guys have ever launched a product where both the micro and the full size have come out at the same time?
00:03:57:12 - 00:04:28:11
Yeah, that's a great question. I think it might be I'd have to go back and check, but I think this might be the first time we've listed both flavors or both sizes of a contract at the same time. And you're absolutely right. It really speaks to the wide range of demand for these futures on Solana and XRP. And because we've heard from around the marketplace, from clients, whether they're institutional or the active individual trader and the retail trader is that they are more, you know, they're having more organic exposure and wanting to trade these these two tokens.
00:04:28:17 - 00:04:50:16
So when we look at Solana, you're absolutely right, where it's certainly since the beginning of 2024, with its record fast processing times becoming an alternative to the Ethereum network and sort of the value that ether places on that network. You know, it's, you know, on either it's the gas, right? It's the it's the currency for enabling all these projects on the protocol.
00:04:50:22 - 00:05:19:16
And Solana is really rivaling that. I think we're really starting to see that uptake. And I think what's interesting is when we look at this, it's, you know, it's a top five coin. It's popular amongst the DeFi crowd for Solana. And it also has a unique characteristic of the proof of history. So that's interesting where I think it's another advancement and sort of coalescing around that mechanism is great for the space and also adds a different flavor of why people are trading Solana, because I don't necessarily see it as an either or choice.
00:05:19:16 - 00:05:45:22
It's to be Solana. Any ether we Solana either, and it fits into all their strategy. But when we look at the the the micro size and the standard size contract, it's also helpful for enabling the ETFs around Solana and the soon to be ETFs around XRP. And when we also looked at XRP, it's a similar story where it has a really strong use case, just a little bit different in terms of you know, they're the transactions on the XRP ledger.
00:05:45:22 - 00:06:07:17
Settle in 3 to 5 seconds. They're processing 1500 transactions per second with minimal fees. XRP itself is a top three coin in market cap, in terms. And it's also very actively traded in the spot market. So it's also when you look at this, the ability to use futures alongside their cash positions in crypto. That's a strategy a lot of traders are familiar with.
00:06:07:21 - 00:06:37:07
So the unique and very tactile use cases of these protocols and the associated tokens, along with the fact that people are already actively trading and holding the spot size. Sorry, the spot position is a great use case for both size contracts. So let's talk about CME Group and how these two products really fit together now and are coming together for your overall digital asset strategy.
00:06:37:09 - 00:07:03:21
Yeah, absolutely. So I think our digital asset strategy, it see me has remained steadfast since we first got into into Bitcoin back in 2017. And is that we want to provide the regulated, transparent, trusted experience and venue for those that either need to manage their risks associated with cryptocurrency or want to access it in a more regulated, trusted fashion via futures and options on futures at CME Group.
00:07:03:23 - 00:07:32:09
Just like our other contracts, both the Solana and XRP futures are cash settled against the CME CF reference rates that are published once a day at 11:00 am eastern, 4 p.m. London time. And then in terms of the hourly, we cover date for Solana that that micro-sized contract is 25. So the standard size is 500. So then when we look at XRP that micro size is 2500 XRP with the standard standard size being 50,000 XRP.
00:07:32:11 - 00:07:59:16
So you know they plug and play an aspect of like similar sized micro similar size standard. We're trying to make it as easy and familial as possible to people such that they can plug and play XRP and Solana futures the same way they're trading Bitcoin, ether, micro E-mini options, all these things. We're really trying to keep them as familiar and right size as possible to provide that precision to the market participants.
00:07:59:18 - 00:08:23:10
Got it. And I was going to ask about the tick size and the values of these contracts. You've already gone over that, but maybe if there's anything else we missed with them, maybe go over that right now. I think the other thing just to let people know is that, similar to not only, where we introduced both size contracts at the same time, we've offered all of the transactional handshakes and mechanisms that people are used to.
00:08:23:12 - 00:08:43:11
So there's block trades, there's boutique. You can trade on the clock, as per normal. So it's really the full suite of offering, and you can now do all those other strategies and trade types that you've done in crypto and or micros. You can do those right out of the gate on Solana and XRP. All right. Let's talk about Spark Quarter futures.
00:08:43:13 - 00:09:06:19
When I saw this that you guys were doing this, I was like, okay, interesting. Kind of moving away from the traditional CME futures, right? I mean, it feels a little different to me from what you're looking at traditionally with S&P and all the different products that have spawned out of that. What was the motivation for going to spark for the futures?
00:09:06:21 - 00:09:28:06
You know, when we look at the Genesis for spark coated futures, again, like Solana and XRP, it was really in response to clearly articulated customer demand. And Andy, as you know, and all your your listeners and viewers over the years, you know, one of our key strategies here at semigroup is making our markets and our products more accessible to more of the market.
00:09:28:08 - 00:09:59:09
And when we look at that, we've had the success with micros, where we introduced the micro minis back in 20 2019. And then we've expanded it through some of the other asset classes. We have micro, Bitcoin, micro, ether, micro, Solana, micro XRP. It's really about offering that flexibility and choice such that the investor and the market participant can have that precise risk management and access in the market that works for their strategies that we're not sort of, you know, verbally pricing people out as a function of contract size or too much use of capital in their account.
00:09:59:11 - 00:10:23:00
So with spark quoted, one of the other barriers to entry we've heard about for a long time, particularly when looking at things like the the equity ETF market is people sometimes are in, you know, a little bit unsure of how to trade the futures basis. So what spark what it does is it's a it's a full fledged future in design regulated offering.
00:10:23:02 - 00:10:42:10
But the price you're going to see on screen matches the price that you might see on CNBC for that index for that asset you're looking to trade. So now you don't necessarily need to worry about the bitcoin basis. You can trade spark voted bitcoin just by pulling up on your browser, looking at TV, looking at your phone of the price of Bitcoin the price of eath.
00:10:42:12 - 00:11:07:24
Here's the price. You can trade on futures, but it's a futures contract with all the benefits of being available nearly 24 hours a day. The capital efficiency and offsets. Right. So it's really something that I think is interesting, but we're really trying to remove some of those barriers to get even more people that are active in other parts of the trading ecosystem, to take those final steps to cross over to traded CME, other futures.
00:11:07:24 - 00:11:31:12
Guy, as you know, obviously you guys are kind of goes without saying, but I love this I love this because again, listening to demand and getting to know you over the years, Tim, nobody that I know of has brought more products to CME for, let's call it retail traders. I think for all levels of traders. I think you definitely have hit that mark.
00:11:31:14 - 00:11:54:08
This is something I just I would say a lot of times I'll anticipate kind of what you guys are going to do with this one. I was thinking about it years ago, like what had ever happened. And now that it's happening, it just really strikes me as something that's so important to all of the traders out there to for an easier relationship to understanding futures.
00:11:54:09 - 00:12:14:21
I think it's a it's a really important step for that because futures have become so much more mainstream now. I mean, think about you. And I did that first micro show, like you said, 19. It was probably I don't even know. I can't even believe that was six years ago, which is crazy to me and how far we've come in the futures industry.
00:12:14:23 - 00:12:42:15
And this step would spark quarter futures, reaches another audience that I think makes us so much bigger. I'm curious why now. Right. I know it's demand, but I think demand has probably been there, I think, and also explain a little bit how they work, because when you have a future that is moving off of the spot where the price, you know, we're used to minis and micros moving in quarter ticks, now that's going to change with this.
00:12:42:18 - 00:13:05:23
So talk about the pricing of this product and why this is happening now. Yeah that's a great question. And when we look at sort of like the why now, I think it really is a confluence of a lot of momentum in the marketplace, a lot of the things that not only see who's done, but folks like yourself in terms of educating the market, getting folks more comfortable with futures, understanding all the benefits.
00:13:06:00 - 00:13:26:21
And then when you marry that with designing products that are approachable and right size for a certain customer segment. And, you know, education is a huge focus of ours as well. Here at See Me Group, I think we're really just starting to see that where people are more familiar, they are trading other parts, whether it's single stocks, equities, options, ETFs.
00:13:26:21 - 00:13:49:14
Right. They're really getting more involved and falling more in love with markets. So just meeting clients where they're at in a way that's more colloquial, more familiar, easy for them to understand. We're just lowering some barriers to entry, to our market without necessarily changing the fundamental characteristics of the product. As you said, these are these are still futures at their core.
00:13:49:20 - 00:14:15:20
They're regulated by the CFTC. They're trade on Globex. Are they they're essentially clear. They're they're, you know, guaranteed by by CME. So you get all those benefits. But you can just say, hey the S&P 500 is at X where Bitcoin's at Y or ether Z. You can just see that. And you don't have to sort of understand is it interest rates or dividends or some other idiosyncratic risk that maybe is impacting the basis right now?
00:14:15:24 - 00:14:41:24
I just know I want exposure at this level, and that's what it translates to in terms of the price that I've gone long or short. Now, the way the contract works is if you do hold this position overnight, there is a there's a financing adjustment because there is financing embedded in futures contract. So it's really that spot equivalent price plus that daily financing adjustment will be what you see that cleared futures position sort of on your account statement.
00:14:42:01 - 00:15:00:15
But it's very easy to think about is that you can just look at the the price movement of the index plus that running total of financing for how many other days that I've held that position. And there's your pal. So I think it's it's something that if people just spend a little bit of time, go to see me Khou.com watch all of our educational content, they'll see this contract works.
00:15:00:17 - 00:15:22:03
Is pretty easy to understand and how it works, and they'll enjoy all the benefits of trading at that's that spot equivalent price on their screen. When does this contract expire? Obviously, we're used to a quarterly expirations rollover. You and I have had a lot of conversations about roll over. When does this contract expire and roll over. Yeah.
00:15:22:03 - 00:15:40:14
So we're still going through the regulatory review process and targeting to launch later this year. The contract because it is a future will have a expiration date that is a central tenant of what a futures contract needs to be a regulated future in the US. So it will be longer dated in nature. I'm just encourage folks to, to stay tuned.
00:15:40:14 - 00:15:56:11
And, you know, as the product specs get finalized, as we finish that regulatory review, the, the final settlement and termination will be will be a clear contract aspect, but it's important to note it will have one, you know, that there is a terminal point to this contract and you will be able to to roll them if you have to.
00:15:56:12 - 00:16:16:24
But just that longer dated element means it's not on that monthly or quarterly cycle or some of the other, other types of contracts we have at CME. I look forward to having you back to have that conversation. And of course, we'll be announcing that as soon as we hear from you guys what that is. How does this recent launch of products?
00:16:16:24 - 00:16:56:09
We'll start with the crypto side Solana, XRP. What's CME Group in the competitive arena with other crypto and digital asset exchanges? You know, it's interesting where we I think CV groups come a long way on the crypto front. When we first started talking about it in 2015, with the introduction of the reference rates and then going live with the reference rates in 2016, and then, you know, announcing in October of 2017 that we launching in December 17th people thought we had sort of no, no, no spot at the table for offering crypto products, joke around a lot with the team words like, you know, trad fi was an insult, which is pretty weird,
00:16:56:09 - 00:17:24:15
right? If I'm being honest. But we've come a long way in terms of being that trusted venue. You know, we were recently named as the most trusted cryptocurrency exchange by Forbes. We have Bitcoin eath, XRP soon on May 19th, Solana we we launched last month in April options futures rose Bitcoin Friday futures. We have almost I think 23 or 24 real time indices and reference rates.
00:17:24:17 - 00:17:45:06
So seeing these become, you know, a household name in the cryptocurrency industry because people really value that trusted, transparent, regulated experience. And I think that's something that we're here and myself and the team are very proud of. But it's just kind of sticking to what we do. And that's building new markets for clients. This is not just for Bitcoin.
00:17:45:06 - 00:18:04:07
We've done this in our nearly 200 year history at CME is that if a new asset class is developing, if new risks are manifesting in the market, we were here to help build markets so people can access and transfer and manage that risk as efficiently as possible. So really proud of how we've come and we're really starting to see that on the volume front.
00:18:04:09 - 00:18:28:01
I think when we look at Q1 of 2025, that's our third in a row record quarter for volume in our cryptocurrency products here at CME Group. And that's effectively done with just Bitcoin and ether. So that's why I'm so excited about adding some of these other tokens and, cryptocurrencies to the offering here at CME Group, because I think that's only going to increase in value.
00:18:28:01 - 00:18:49:15
And then we look at the capital offsets or the margin offsets between the various cryptocurrency contracts. I really think people are going to figure out that trading. And CME is one of the most efficient and certainly the most trusted way to treat cryptocurrency. The proof is already there with the volume. Like you said, Tim, I was looking at those numbers months ago and I'm like, wow, these numbers are just growing massively.
00:18:49:17 - 00:19:08:06
I think it does help under this new president Trump administration. They seem to be very pro crypto as well. And you're seeing again, mainstream people across the board. I can't tell you how many people have come up to me and talked about futures and crypto, futures. It's just it's pretty incredible the time that we're in right now.
00:19:08:10 - 00:19:27:17
It's funny, I know that you and I have talked so much in the past, like trying to get, well, not trying to get, but really just talking with retail traders and getting them to understand these different products precisely hedging through micros and doing all sorts of different things. And you see how sophisticated the retail investor has gotten, I think in a pretty short period of time, Tim.
00:19:27:19 - 00:19:52:10
I think it makes it, you know, just somewhat so important that they've gotten there. And like you said, because education has become such a big part of it, that that has really helped the growth of this across the board. And, you know, I can't say enough how many conversations I have about these products that are at CME Group that I didn't think I would have as fast as we are seeing, you know, just several years ago, the growth is unbelievable.
00:19:52:12 - 00:20:12:19
The I want to go back to the spark quoted again, because the spark quoted to me is, man, I sit back and I think about this and I think, how big of this get? I mean, I know you guys have to be be sitting back there and see me thinking about this product coming out. It comes in in at a time where markets are extremely busy.
00:20:12:21 - 00:20:42:15
Equity indexes are very volatile, and you're going to have another product to support everything. We're doing. You know what, futures. And I'm just curious behind the scenes, how excited are you guys about this, spark for the futures. You know, I mean, my my crystal ball is broken. So always hard to tell exactly how it's going to be received by the market, but I think that it myself, the team, we're pretty excited because this is something we've been working on for a while.
00:20:42:17 - 00:21:13:04
We've been talking to a lot of the clients, our retail partners across the globe, and the fact that we have clients and partners interested in the US, in Asia, in Europe, and it's really appealing to a sort of a wide swath of traders not currently in our markets, whether that's the ETF trader in the equity markets here in the US, or maybe that CFD trader internationally, or maybe even that sort of, you know, crypto perpetual trader that is is super popular in apex.
00:21:13:06 - 00:21:48:22
We're now giving them a way to access our products here at CME Group, in a way that is more it is regulated, is more capital efficient, and, you know, is something that they're familiar with, right, in terms of it's easy to understand with respect to the spot price you see on screen. So I think when you see that upwelling of customer demand and then enthusiasm that is beginning to form ever since we made that announcement, back in April, you know, earlier in the month that I think that's something that is encouraging, but time will tell.
00:21:48:24 - 00:22:17:09
You know, I felt something similar, back in May of 2019, launching the Mike Rose, you kind of felt it was there. But you had to, you know, the market needs to cooperate. A lot of things do need to happen, to have a successful product launch. But I think we're onto something. And I'm really interested to see how it grows here, especially when we look at things like Bitcoin and Eve getting this type of product to the right size, even attract more people, into trading futures and CME Group.
00:22:17:15 - 00:22:33:00
I'm optimistic, but with time will tell. It's why we have markets to have. Right. You know we're putting something out there and let's see what the demand is. I know you guys wouldn't be creating this product if you didn't know that there was demand. And I can't tell you how excited I am to see how everyone takes it.
00:22:33:00 - 00:22:54:12
Like you said, you never know. But I expect big things from this product. I expect this product to come in and just make futures more attractive to a larger audience. At the end of the day, that's that's, I think, important, you know, giving people options. And so like you said, I'm really looking forward to it. I'm excited about it.
00:22:54:14 - 00:23:19:07
So we know that Solana already has launched Sol. So that product is already available for everybody. May 19th is the expected date for, XRP. That's, micro and the fool. I know that we're waiting for a couple things to confirm that. And then ultimately, when do you think spark quoted hits the take? Right now we're targeting June 30th.
00:23:19:09 - 00:23:40:21
We're still going through the regulatory review process with the CFTC. So we'll look to firm that up as we get closer. But that's the target we're working towards, internally with the regulators and with all of our retail partners to make sure they're ready to turn it on day one. Got it. Tim, you're the best. It's been really a pleasure and an honor to be able to have these conversations with you.
00:23:40:21 - 00:23:58:00
Over the years. So much has happened, like we said, in such a short period of time. Thinking back, it's hard to imagine. Six years ago, the Michaels were just started. I feel like I've been in this business for a long time. I feel like they've always been there, and I just how time is flying by and how much busier we're getting.
00:23:58:02 - 00:24:12:05
In general and futures, how much more volume CME is doing. It's it's been great to be along the ride here with you. And I can't thank you enough for taking the time to, to come on this program and speak with me about all of the good things you guys are doing at CME Group. Thank you so much for joining me.
00:24:12:07 - 00:24:34:17
Yeah, thanks for having me. And it's great to be back. We've had some great conversations over the years. We've certainly been in this ride together. It's been a lot of fun looking, looking forward to see what the future has in store for us.