Basis Trade at Index Close (BTIC) allows market participants to trade futures at a fixed spread to the reference price of a known benchmark index.
How does BTIC work?
BTIC orders and transactions have their own unique tickers, providing market participants price discovery and transparency on the spread, or difference, between the price of the futures contract and the underlying index throughout the trading day.
For cryptocurrencies, the value of the spread, or basis, depends on the futures implied financing rate, the time left to contract maturity, and perceived volatility among other factors. The basis can either be negative or positive.
Once the official reference rate is published, the resultant futures of the BTIC transaction are cleared at a price equal to the reference rate, plus, the agreed upon BTIC trade price.
BTIC transactions completed by 4:00 p.m. London time will use that trade date’s Reference Rate to calculate the corresponding futures price while those BTIC transactions completed after 4:00 p.m. London time will be against the next trade date’s Reference Rate.
Additionally, eligible contract participants may negotiate BTIC block trades directly with another counterparty and submit the trade for clearing.
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Past performance is not indicative of future results. Derivatives Trading is not suitable for all investors.
