Bitcoin Futures Exchange for Physical (EFP) Transactions

  • 25 Feb 2019

What is an EFP?

Exchange for Physical (EFP) transactions are privately negotiated trades between two counterparties allowing them to simultaneously transfer a futures position for an equivalent spot market position or vice versa.

What else do I need know about EFPs?

  • Governed by Exchange Rule 538
  • No minimum trade size; price increments must be in appropriate tick size, $5 per bitcoin
  • Must be executed at commercially reasonable prices that are mutually agreed upon by the parties to the transaction
  • The futures leg should be reported as soon as possible but not later than the end of the business day on which the EFP was executed
  • Anyone can trade (no eligible party restriction)
  • Parties to an EFP are required to prepare and maintain all documents in connection with both the futures and related physical bitcoin position pursuant to CFTC Regulation 1.35
  • Participants to an EFP can negotiate directly or can use a broker to help find the other side of the trade

Benefits of an EFP Transaction

  • Added convenience of private negotiation
  • Risk management with CME Clearing, one of the world’s leading central counterparty clearing providers
  • Tried, tested and straightforward trading method for parties with complementary objectives
  • Available at all times, including weekends

How would this work for bitcoin?

Clients can use the mechanism to efficiently transfer their bitcoin exposure from a physical to a futures position depending on their specific goals. Working through a broker or directly with each other, two parties agree to trade bitcoin between themselves; the two parties also agree to exchange an equivalent position in CME Bitcoin Futures that is opposite in direction to their, respective, physical bitcoin transaction. The spot market transaction can be bi-laterally negotiated and consummated on an OTC platform while the futures piece is cleared through CME Direct.

Why enter into a bitcoin EFP transaction?


Who can benefit?


How can an EFP help?

Monetize a long bitcoin position

Miners, Commercials, All

By selling physical bitcoin and buying an equivalent futures position, clients are able to free-up capital and yet maintain exposure to bitcoin price movements.

Unwind a futures – spot bitcoin spread trade

HFs, Props, CTAs, Retail

Clients who are trying to benefit from a price dislocation between the spot and futures markets can use an EFP to close-out the position and 'lock-in' the spread.

Manage bitcoin exposure during weekends/holidays


CME futures trade electronically 23 hours a day from Sunday at 5:00pm CT to Friday 4:00pm CT. To manage risk when CME is closed, clients can trade bitcoin in the spot market and EFP to futures.

Cover a short bitcoin position

OTC Desks, HFs, CTAs, Props

A client who is short bitcoin and whose borrow has been called, can use an EFP to access bitcoin to deliver against the short physical position and still remain short through the futures market.

Source bitcoin to lend out

OTC Desks, HFs, CTAs, Props

Clients who do not have bitcoin inventory to lend out can use an EFP to source physical bitcoin, lend it, collect the lending fee and maintain market neutrality.

Protect a bitcoin loan OTC Desks, Miners, All

Clients who have loaned out their bitcoin inventory can use an EFP to hedge the risk of their bitcoin not being returned.

Improved capital efficiencies

Miners, All

A key benefit of futures is the leverage they offer. By using an EFP, clients are able to free up capital for use in other alpha-generating strategies.


Party B agrees to sell 500 bitcoin to Party A and buy 100 bitcoin futures from Party A (economically, both parties are risk neutral). Additionally, the two parties agree to a spread of $5 between the spot and futures price.

If bitcoin is at $6,500; Party B receives $3,250,000 on the sale of bitcoin to Party A. Simultaneously, Party B buys the futures contracts from Party A at a price of $6,495 ($6,500 - $5).

For the futures contract, Party B would need to maintain, at least, 37% margin*, or $1,201,575. The difference between the bitcoin sale price and the margin that needs to be posted is ‘freed-up’ capital and may be used by Party B as needed.

By using an EFP, Party B, benefits from the leverage offered through the futures contract and is able to free-up $2,048,425 while still maintaining exposure to bitcoin.

* Represents exchange minimum; subject to change; clearing firms may require a higher amount

How do I get started?

  • Establish a clearing account with one or more of the 2+ dozen FCMs (Futures Commission Merchants) currently supporting the contract
  • Download CME Direct platform
  • Register for CME ClearPort
  • Assign traders and brokers

Why use CME futures for bitcoin exposure?

  • No need to establish a wallet; eliminates hacking risk
  • Easily convert bitcoin exposure to USD
  • No actual movement of bitcoin
  • Do not need possession of bitcoin to sell (or to borrow bitcoin to sell short)
  • Price transparency, leverage, liquidity and capital efficiencies
  • Trade on a regulated, established exchange
  • USD-settled contract to benchmark CME CF Bitcoin Reference Rate (BRR)

BTC Specs


Contract Unit

5 bitcoin, as defined by the CME CF Bitcoin Reference Rate (BRR)


Minimum Price Fluctuation

Outright; $5.00 per bitcoin = $25.00 per contract

Calendar Spread: $1.00 per bitcoin

= $5.00 per contract



Trading Hours

CME Globex 5:00 p.m. – 4:00 p.m. CT Sunday – Friday

CME ClearPort 6:00 p.m. – 5:45 p.m. CT Sunday – Friday

Product Code

Outright: BTC

About CME Group

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Bitcoin Futures

Learn more about Bitcoin futures, including contract specs and the underlying CME CF Bitcoin Reference Rate (BRR).

Learn More