LCH received the required regulatory authorisation from the French national competent authorities (ACPR, Banque de France, and AMF) and European supervisory authorities (EMIR College, ESMA) to clear cash-settled Bitcoin index futures and options contracts.
LCH will provide clearing services through its new dedicated service, LCH DigitalAssetClear, for the contracts traded on the UK FCA regulated digital asset derivatives trading venue, GFO-X.
The offering has been developed by LCH and GFO-X in close consultation with market participants to ensure their digital asset derivatives are traded and cleared through a service that is secure, highly regulated and focused on digital asset derivatives.
LCH DigitalAssetClear is underpinned by a segregated default fund, tailored risk management model, and dedicated set of clearing rules. LCH continues to engage with General Clearing Members and plans to launch the clearing service later in 2024.
The new cash-settled Bitcoin index futures and options contracts will be cleared through LCH DigitalAssetClear and will be based on the GFO-X/Coin Metrics Single Asset Real-Time Bitcoin Index (GFOXBR), which is an EUBenchmark Regulation -compliant reference rate of the US 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 and a dedicated set of clearing rules – for market participants clearing these instruments. By using LCH DigitalAssetClear, members and clients will benefit from LCH’s innovative approach to enabling clearing of this asset class, in addition to its leading risk mitigation, settlement, netting and margin efficiencies, all within a regulated environment.
Officials from LCH said this regulatory approval will enable institutional market participants to trade and clear cash-settled Bitcoin index futures and options within a regulated environment they are familiar with and which will allow them to benefit from LCH’s proven risk management capabilities. LCH is excited to be working with GFO-X to provide a regulated marketplace for this asset class as they look to expand their services as a truly international clearing house.
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