To provide clearing services for bitcoin products
LCH SA, a subsidiary of the London Stock Exchange Group (LSEG), announced on the 13th that it plans to provide a clearing service for crypto assets (virtual currency) Bitcoin (BTC) related products. It is expected to start operations in the fourth quarter (October to December) of 2023.
Specifically, it plans to clear cash-settled Bitcoin index futures and options contracts traded on UK crypto derivatives exchange GFO-X.
The service is designed to allow LCH SA and GFO-X to meet their crypto derivatives trading and clearing needs in a secure and regulated environment. In terms of service provision, a new clearing service organization, LCH DigitalAssetClear, has been launched.
What are derivatives
Financial products derived from underlying assets such as virtual currencies and stocks. The English notation is “derivative” which means “derived”. Also called “financial derivatives” in Japanese. Representative derivatives include futures trading, option trading, and swap trading. They are used to reduce the risk in trading the underlying asset or simply to pursue higher profitability.
Demands to trade in a regulated environment
Frank Soussan, head of LCH DigitalAssetClear, explained:
Bitcoin index futures and options are a rapidly growing asset class, with institutional investors increasingly demanding access in a familiar regulatory environment.
Offering clearing services for cash-settled, dollar-denominated cryptocurrency derivatives contracts this time on GFO-X is an important development for the market.
Soussan also highlights the risk management capabilities that LCH has demonstrated in its business so far, as well as GFO-X’s advanced technology and optimized contract specifications.
In addition, Arnab Sen, CEO and co-founder of GFO-X, commented as follows, keeping in mind the bankruptcy of FTX.
Recent developments in cryptocurrency trading highlight the need for secure, regulated venues where large financial institutions can conduct large-scale transactions while protecting the assets of their customers.
We are the UK’s first regulated centrally-cleared exchange specializing in cryptocurrency futures and options. It aims to meet the growing demand from investors while meeting the requirements for trading and clearing cryptocurrency derivatives in a safe and regulated environment.
LCH is a leading clearing house that handles a variety of asset classes. It operates clearinghouses in the UK and France, and is also opening offices in the US and Asia Pacific. We provide clearing services for various assets such as OTC, FX, bonds, commodities, cash equities and equity derivatives.
LCH’s majority-owned London Stock Exchange is a leading provider of financial markets infrastructure, with 23,000 employees in 70 countries.
connection: FTX considers reopening of virtual currency exchange
Movement of the London Stock Exchange
Last February, the London Stock Exchange acquired TORA, which provides trading technology. In addition to equities, bonds, FX, and derivatives, TORA operated order execution management systems and portfolio management systems for cryptocurrencies.
In a statement at the time, the London Stock Exchange said: “By adding digital assets to our trading capabilities, we are expanding our presence in a growing asset class, as institutional investors are increasing their exposure to cryptocurrencies and more. It is said that
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