The London Stock Exchange invites itself on Bitcoin derivatives

London Stock Exchange – Credit: Shutterstock

The subsidiary LCH from London Stock Exchange signs a contract with GFO-Xa platform regulated by derivatives. LCH will provide its client with clearing services for Bitcoin products.

Bitcoin and associated financial products are becoming a little more institutionalized despite some hostility from the central authorities of traditional finance. The group that owns the London Stock Exchange demonstrates this once again.

The London Stock Exchange is not, however, directly in charge. The initiative is taken by its subsidiary LCHwhich operates clearing houses in the UK and France. The player provides clearing services for all asset classes.

A regulated environment for institutions

Currencies, fixed income, commodities, equity derivatives… and now also Bitcoin derivatives. LCH formalizes signing of contract with GFO-Xwhich describes itself as the UK’s first centrally-cleared, regulated trading platform dedicated to digital asset derivatives.

Authorized and regulated by the Financial Conduct Authority, the UK’s financial regulator, GFO-X will therefore use LCH’s clearing services for crypto products. The scope includes futures and options contracts.

But not just any contracts since futures and options concern a Bitcoin index and cash settlements on the digital asset derivatives trading platform. The new contracts are based on the GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR).

This is presented as a reference rate in line with the BMR of the BTC price in US dollars. Further clarification, “ companies will be able to trade directly in futures and options on the Bitcoin “.

Bitcoin futures and options: assets on the rise

With this contract, GFO-X intends to attract new customers.

This clearing service will give market participants access to crypto derivatives clearing in a regulated environment,” the two business partners emphasize.

Clearing for these crypto products will be done through LCH DigitalAssetClear. However, its operator indicates that the service will be fully separate, “ including through a separate default fund.” The service is scheduled to go into production in the fourth quarter of 2023.

Bitcoin index futures and options are a growing asset class, with increasing interest from institutional market participants looking to access them in a regulated environment they are familiar with,” justifies Frank Soussan, head of LCH DigitalAssetClear.

“ The recent events occurred in the digital asset market have highlighted the need for a safe and regulated place where large financial institutions can conduct large-scale transactions, while protecting their clients’ assets,” adds Arnab Sen, CEO and co-founder of GFO-X.

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