The London Stock Exchange Group has teamed up with Global Futures and Options (GFO-X) to offer the first regulated trading and clearing in bitcoin index futures and options derivatives in Britain.
GFO-X a startup platform aimed at global institutional investors looking to trade digital asset derivatives, is a licensed entity by the UK Financial Conduct Authority.
LCH, the clearing house arm of the London Stock Exchange Group, will offer clearing services for cash-settled bitcoin index futures and options.
In a statement, LCH said:
“Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with. Offering centralised clearing for these cash-settled dollar-denominated crypto derivatives contracts on GFO-X is an important development for the market.
The service is a powerful combination of GFO-X’s high-performance technology and optimised contract specifications with LCH’s proven risk management capabilities.
We look forward to working with GFO-X and market participants alike to build a liquid, regulated market place for these products, and contributing to its safe growth and development.”
Clearing houses act as intermediaries between any two entities or parties looking to trade ensuring financial transactions go smoothly. Since the 2008 financial crisis, they have been favored by regulators as a way to lessen the risk of separate bilateral deals among players such as investment banks. Clearing houses function to provide extra security so that investors can trade freely, knowing that their investment decisions will be honored and enforced by the clearing firm.
According to Arnab Sen, CEO and Co-Founder of GFO-X:
“Recent market events in the trading of digital assets have highlighted the need for a safe, regulated venue where large financial institutions can trade at scale, while keeping their clients’ assets protected. LCH delivers proven risk management capabilities across a range of asset classes and some of the most sophisticated clearing services in financial markets today.
As the UK’s first regulated and centrally cleared trading venue focused entirely on digital asset futures and options, our joint vision is to ensure digital asset derivatives’ trading and clearing requirements and growing demand can be met within a secure, highly regulated environment.”
The service is expected to go live in Q4 2023.
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