The United Kingdom is the newest addition to the list of countries that have legalized bitcoin futures trading in some form.
The London Stock Exchange Group (LSE) said on Thursday that it will provide trading and clearing services for derivatives based on the Bitcoin index.
In a statement released Thursday, LCH, the clearinghouse arm of the London Stock Exchange Group, said that it would provide clearing services for cash-settled bitcoin (BTC) index futures and options.
Cash-settled Bitcoin (BTC) index futures and options contracts traded on GFO-X will have access to LCH’s clearing services, the company announced in a press release.
In the UK, GFO-X is the first exchange for digital asset derivatives that is both authorized and regulated by the Financial Conduct Authority (FCA).
Britain Aims To Become Bitcoin Hub
Earlier this year, Britain, which aspires to become a global center for crypto technology, opened a public consultation on future legislation for crypto assets, which are unregulated at present.
Frank Soussan, chief of LCH Digital Asset Clear, claims that bitcoin index futures and options are a fast-growing asset class due to the rising number of institutional market participants seeking access within a regulated setting.
“Offering centralized clearing for these cash-settled dollar-denominated crypto derivatives contracts on GFO-X is an important development for the market,” Soussan said.
In the fourth quarter of this year, Bitcoin futures and options trading are anticipated to begin. The clearance service is now awaiting certification from French authorities.
Arnab Sen, CEO and co-founder of GFO-X, made the following statement:
“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.”
The Major Role of Clearinghouses
Trading agreements made on an exchange can be settled at a central clearinghouse. They have been favored by authorities since the 2008 financial crisis as a strategy to reduce the risk of investment banks doing separate bilateral dealings with other participants.
Rival CME Group already offers bitcoin futures and options, while the Chicago Board Options Exchange acquired a digital asset exchange, ErisX.
On Monday, the FTSE Bitcoin Index will be available in futures contracts traded in U.S. dollars and Euros on the Eurex platform of Deutsche Boerse.
As investor interest in cryptocurrency grows, more and more conventional financial institutions are beginning to offer cryptocurrency trading and related services.
Many large financial institutions have entered the crypto market, including J.P. Morgan, Morgan Stanley, Goldman Sachs, and BlackRock.
Several Bitcoin futures products, primarily futures ETFs, have been introduced in several countries over the past few years.
Following the United States’ lead in 2021, countries like Brazil, Argentina and even Hong Kong made similar moves.
-Featured image from CoinNewsSpan