London Stock Exchange To Offer Clearing Of Bitcoin Futures And Options 14

London Stock Exchange To Offer Clearing Of Bitcoin Futures And Options

  • The London Stock Exchange will soon offer clearing services for Bitcoin futures and options.
  • The BTC index derivatives clearing will be made available through the group’s clearing subsidiary LCH.
  • LCH will provide clearing for cash-settled BTC index derivatives on the UK-based GFO-X exchange. 

The London Stock Exchange Group has announced its plans to offer the clearing for Bitcoin index futures and options. As the world’s eighth-largest stock exchange, the LSE Group will facilitate the trading of BTC futures and options through its clearinghouse subsidiary LCH. 

Bitcoin index derivatives on FCA-regulated exchange

According to a press release from the LSE Group’s LCH, the clearing services for Bitcoin index derivatives will be provided through the clearing subsidiary’s Paris-based arm. A clearinghouse is a designated intermediary between a buyer and a seller in a financial market. The clearinghouse validates and finalizes the transaction, ensuring that both parties honor their contractual obligations.

LCH has reportedly signed a deal with the U.K based digital asset exchange GFO-X, to bring BTC futures and options trading to traders. Founded in 2020, GFO-X is the United Kingdom’s first centrally cleared trading platform for digital asset derivatives. The exchange is authorized and regulated by the UK’s Financial Conduct Authority (FCA). The new venture will operate as LCH DigitalAssetClear. The BTC options and futures traded on GFO-X will be cleared by the newly formed entity. 

LCH stated that LCH DigitalClearHouse will operate a segregated clearing service for market participants clearing the BTC derivatives, which will include a fully segregated default fund. The new Bitcoin index derivatives contracts will be cash-settled through LCH DigitalAssetClear and will be based on the GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR). GCBRR is a Benchmark Regulation-compliant reference rate of the U.S. dollar price of Bitcoin. The plan is subject to regulatory approval. 

“Offering centralized 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 optimized contract specifications with LCH’s proven risk management capabilities.”

Frank Soussan, Head of LCH DigitalAssetClear