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After CBOE Global Markets and CME Group, the London Stock Exchange Group (LSEG) has made it's foray into regulated trading and clearing in bitcoin index futures and options derivatives.
The LSEG has partnered with the digital asset clearing platform Global Futures and Options (GFO-X), co-led by Arnab Sen, founder of the Hong Kong-based hedge fund Harbour Capital Management, to offer UK's first crypto derivatives trading platform.
Startup platform GFO-X is licenced by the UK's Financial Conduct Authority (FCA) to facilitate the trading of digital asset derivatives by global institutional investors.
DigitalAssetClear, a new segregated clearing service for dollar-denominated digital assets traded on GFO-X, will be introduced by LSEG's Paris-based LCH SA clearing business.
Assuming the new service receives regulatory clearance from French and EU authorities, it is expected to launch in the fourth quarter of this year.
Arnab Sen, chief executive and co-founder of GFO-X said, "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."
Futures and options on the Bitcoin price index that are settled in cash will be available on GFO-X from day one. In addition, the two will facilitate clearance for index derivatives on digital assets paid in cash.
GFO-X claims it will be the first company to take the necessary steps to enable round-the-clock trading to regulate worldwide digital asset exchanges.
We expect to debut in Q4 2023, pending final clearances from the relevant authorities at LCH SA.
Frank Soussan, head of LCH DigitalAssetClear, said, "Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with."
"Offering centralised clearing for these cash-settled dollar-denominated crypto derivatives contracts on GFO-X is an important development for the market."
Investment banks, trading businesses, and liquidity providers comprise the advisory group that GFO-X and LCH SA have worked with to improve product design and risk processes.
London Stock Exchange Group is a United Kingdom-based stock exchange and financial information provider.
The company has complete control of the London Stock Exchange and a majority share in LCH and Tradeweb in addition to Refinitiv, LSEG Technology, and FTSE Russell.
Earlier in March, after a lockup period expired, investors including Blackstone, Thomson Reuters, and others sold off around £2 billion ($2.4 billion) worth of London Stock Exchange Group shares.
That was after LSEG announced plans to buy back its shares from the consortium.
Refinitiv, once a part of Thomson Reuters, is now owned by LSEG and provides data and analytics.
In 2021, LSE finalised its $27 billion acquisition of Refinitiv, ushering in a new age in which data would account for the bulk of the company's income.
The LSEG's push into a crypto derivatives space is also driven by its ties with Microsoft.
Through a partnership with LSEG, Microsoft made its biggest-ever foray into the financial services industry.
The two companies will work together to develop analytical tools and integrate LSEG's offerings into Microsoft's product line.
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