By Avi Mizrahi
BitMEX (Bitcoin Mercantile Exchange) has announced this week they are launching the world's first bitcoin denominated futures contract on a Chinese A Share index. The new instrument from the bitcoin derivatives focused venue allows cryptocurrency investors to access the walled-off equity market in China and trade with up to 25 to 1 leverage.
The China A50 Equity Index is comprised of the fifty biggest public companies in China and priced in Chinese yuan (CNY). However, investors using the BitMEX product will receive 0.0001 Bitcoin (XBT) per 1 CNY move in the index. Additionally, unlike the Chinese stock exchanges that only open Monday to Friday, the BitMEX contract trades 24/7. The new contract has monthly expiries based on the closing price of the FTSE CHINA A50 Index to two decimal places.
Speaking with Finance Magnates Arthur Hayes, co-founder and CEO of BitMEX, explains the rationale for the new product: "Trading the China A share market for most investors is quite difficult. Due to various restrictions, obtaining long and especially short exposure with leverage is almost impossible. For retail investors without large brokerage accounts, it is even more difficult.
BitMEX aims to provide retail investors globally access to the China A share market using a Bitcoin denominated futures contract (commonly referred to as a quanto futures contract). Investors with only a few hundred USD of Bitcoin can now trade the China stock market. As long as an investor can exchange his or her domestic currency for Bitcoin, he or she can trade the BitMEX China A50 Index Futures contract."