On April 13, 2023, the London Stock Exchange’s LCH division, a clearing house group serving major international exchanges and a wide range of over-the-counter (OTC) markets, announced its plans to offer clearing of bitcoin index futures and options contracts traded on GFO-X. Frank Soussan, the business 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 Clear Bitcoin Futures and Options Contracts Reflects the Growing Interest Among Institutional Market Participants
A division of the London Stock Exchange (LSE) will clear bitcoin index futures and options contracts, according to a statement from LSE’s clearing house arm, LCH SA. Subject to regulatory approval, the contracts will stem from GFO-X and be part of a newly created segregated clearing service called LCH Digital Asset Clear.
Developed by GFO-X and approved by the U.K.’s Financial Conduct Authority (FCA), the bitcoin contracts will be cash-settled through LCH Digital Asset Clear and use metrics from the GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR). As the world’s largest derivatives clearinghouse, LCH SA’s move to clear bitcoin futures and options expands the firm’s market presence.
Frank Soussan, Head of 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 environment they are familiar with.” 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, onchain analytics provider Glassnode revealed that for the first time, “the amount of open interest in bitcoin options contracts ($10.3B) has surpassed that held in futures contracts ($10.0B). Futures OI has been relatively flat in 2023. This results from significant call option buys, as investors start to speculate on higher [bitcoin] prices,” Glassnode explained.
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What impact do you think the entry of LCH SA into bitcoin derivatives clearing will have on the institutional adoption and mainstream acceptance of cryptocurrencies? Share your thoughts about this subject in the comments section below.
Jamie Redman
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