LCH to Clear GFO-X Bitcoin Index Derivatives
Posted by Colin Lambert. Last updated: April 14, 2023
LCH SA has 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.
LCH says the offering has been developed with the UK digital asset derivatives trading venue, which has been approved as a multilateral trading facility by the Financial Conduct Authority, and in “close consultation” with market participants, to ensure their digital asset derivatives trading and clearing requirements can be met within a secure, regulated environment.
The 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 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. The service is expected to go live in Q4 2023.
“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,” says Frank Soussan, head of LCH DigitalAssetClear. “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.”
Arnab Sen, CEO and co-founder of GFO-X, adds, “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.”