On April 13, 2023, the LCH division of the London Stock Exchange, a clearinghouse group serving major international exchanges and a wide range of over-the-counter (OTC) markets, announced plans to offer contract clearing. options and futures on bitcoin indexes traded on GFO-X. Frank Soussan, the trading lead at LCH Digital Asset Clear, stated during the announcement that “bitcoin index futures and options are a rapidly growing asset class.”
LCH SA’s move to liquidate Bitcoin futures and options contracts reflects growing interest among institutional market participants
A division of the London Stock Exchange (LSE) will settle options and futures contracts on bitcoin indexes, according to a statement of LSE’s clearinghouse arm, LCH SA. Subject to regulatory approval, contracts will be derived from GFO-X and being part of a newly created segregated clearing service called LCH Digital Asset Clear.
Developed by GFO-X and approved by the UK Financial Conduct Authority (FCA), the bitcoin contracts will be cash settled through LCH Digital Asset Clear and will use GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR) metrics. ). As the world’s largest derivatives clearinghouse, LCH SA’s decision to clear bitcoin futures and options expands the company’s presence in the market.
Frank Soussan, head of the LCH Digital Asset Clear business, said in a statement that “bitcoin index futures and options are a rapidly growing asset class with increasing interest among institutional market participants seeking access within a regulated with which they are familiar”. He added that “offering centralized clearing for these cash-settled dollar-denominated crypto derivatives contracts on GFO-X is an important development for the market.”
LCH’s entry into bitcoin-related products occurs as BTC is up 80% since the last day of 2022. Additionally, on April 7, on-chain analytics provider Glassnode revealed that for the first time, “the amount of open interest on bitcoin options contracts ($10.3B) has exceeded that held on futures contracts ($10.0B). Futures OI has been relatively flat in 2023. This is the result of significant purchases of call options, as investors begin to speculate on higher (bitcoin) prices,” Glassnode explained.
What impact do you think the entry of LCH SA into bitcoin derivatives clearing will have on institutional adoption and general acceptance of cryptocurrencies? Share your thoughts on this topic in the comments section below.
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