Bakkt has officially revealed the initial deposits its customers will have to make to margin trade its bitcoin futures products.
In a new notice posted Tuesday, ICE Futures U.S. – the actual futures exchange Bakkt’s contracts are trading on – announced the initial hedge and speculative requirements for customers, as well as its monthly rate add-ons.
John Todaro, director of research at TradeBlock, told CoinDesk that the initial margin requirements are “the amount of assets (collateral) that need to be pledged in order to open a position.”
According to Tuesday’s notice, customers will have a $3,900 deposit requirement for both Bakkt’s daily and monthly futures contracts as an initial hedge. The speculative initial requirements will be somewhat higher, at $4,290 each.
The initial hedge requirements are for accounts which already have exposure to bitcoin, Todaro said, adding:“Speculative requirements are for those accounts that are speculating on the price move on bitcoin through futures contracts. The CFTC and other regulating agencies have rules in place to protect futures markets from excessive speculation, which can lead to deviant price fluctuations, volatility, etc.” Add-ons
Similarly to the initial hedge and speculation rates, Bakkt’s inter-month add-ons differ.
Both the monthly and daily futures contracts will have a $400-$1,000 hedge rate, but the speculative rate will fluctuate from $440-$1,100.
A footnote clarifies that the margin rate will vary depending on the expiration date and the “difference in expiration dates of contracts.”
“As contracts trade over time, there then becomes a maintenance requirement in order to keep your position open,” Todaro said. “Depending on market movements, this position may require you to allocate more funds to return the initial margin required.”
The notice also included an inter-commodity spread credit percentage rate, which Todaro explained ...