Morgan Stanley (NYSE:MS) is just the second major financial institution to get involved with bitcoin futures. In an interview with Bloomberg News, Jonathan Pruzan, Morgan Stanley’s chief financial officer, said that his firm has joined Goldman Sachs (NYSE:GS) and has started clearing bitcoin futures trades for its customers.
Mr. Pruzan shared with Bloomberg that Morgan Stanley can arrange for interested clients to “do a trade on the futures and settle in cash.” But he added, “I wouldn’t say it’s been a lot of activity, but it’s for core institutional clients who want to participate in a derivatives transaction.”
While few exchange groups, like the CME Group Inc. (NASDAQ: CME) and the Cboe Global Markets, Inc. (NASDAQ: CBOE), have taken the early plunge into trading bitcoin futures, most major financial institutions have stayed on the sidelines and are observing before they decide to join.
For instance, despite significant investments in blockchain technology by its Bank of America Corporation’s (NYSE:BAC) parent company, Merrill Lynch does not assist its customers with bitcoin investments in any way. Few brokerages, such as Interactive Brokers, TD Ameritrade and E*Trade, allow cryptocurrency futures trading to a limited group of their core customers.
Because of high volatility of the cryptocurrencies markets – bitcoin lost more than half of its value in less than a month after its nearly $20,000 peak in mid-December 2017. Plus, due to uncertainty about what role cryptocurrencies will play in future financial markets, even the companies that are getting involved in cryptocurrencies trading are limiting their participation.
Since its drop below 50% of its peak value, bitcoin has risen and has been trading at almost $11,600 on Jan. 18 – 26% above its $9,205 low that it reached near the end of the trading day on Jan. 17.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.
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