LCH SA today announced it will offer clearing of Bitcoin index futures and options contracts traded on GFO-X, subject to regulatory approval. This will be made available through a new segregated clearing service, LCH DigitalAssetClear.
The offering has been developed by GFO-X, a UK digital asset derivatives trading venue approved as a multilateral trading facility by the Financial Conduct Authority, and LCH SA, in close consultation with market participants, to ensure their digital asset derivatives trading and clearing requirements can be met within a secure, highly regulated environment.
The new Bitcoin index futures and options contracts will be cash-settled through LCH DigitalAssetClear and will be based on the GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR), a BMR-compliant reference rate of the U.S. dollar price of Bitcoin. Firms will be able to trade futures and options on the Bitcoin reference index directly.
LCH DigitalAssetClear will operate a fully segregated clearing service – including a segregated default fund – for market participants clearing these instruments. By using LCH DigitalAssetClear, members and clients will benefit from LCH SA’s innovative approach to enabling clearing of this new asset class, in addition to its leading risk mitigation, settlement, netting and margin efficiencies, all within a regulated environment.
The service is expected to go live in the fourth quarter of 2023.
Commenting on the new service, Frank Soussan, Head of LCH DigitalAssetClear, 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.’
Adding to this, Arnab Sen, CEO and Co-Founder of GFO-X, said:
‘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.’
