London Stock Exchange-backed LCH to Offer Bitcoin Index Derivatives Clearing Services from Q4 2023

Subject to regulatory approval, LCH has partnered with GFO-ax to offer the clearing of Bitcoin index derivatives.

As the Bitcoin and broader cryptocurrency market gain global recognition amid banking crisis, the United Kingdom institutional investors can rest assured the Rishi Sunak government is pro-digit assets. In a stunning move, the London Stock Exchange (LSE) through its subsidiary LCH Limited, LCH S.A has announced that it will begin to offer clearing of Bitcoin index futures and options contracts traded on GFO-X, a UK FCA-approved digital asset derivatives trading platform. Subject to regulatory approvals, the LCH platform will offer customers an avenue for cash-settled Bitcoin index futures and options contracts.

Notably, the new product, which is expected to debut in the fourth quarter this year, is based on the GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR), a BMR-compliant reference rate of the United States dollar price of Bitcoin. According to the announcement, the Bitcoin index futures by LCH will be offered through its segregated trading arm dubbed LCH DigitalAssetClear.

What the Leaders Had to Say on the Bitcoin Index Clearing Services

Commenting on the announcement, Frank Soussan, Head of LCH DigitalAssetClear, noted that there is a growing demand for Bitcoin and crypto products in the country. Furthermore, the Bitcoin market has outperformed traditional investment assets during the first quarter of 2023 and in the past decade.

“We look forward to working with GFO-X and market participants alike to build a liquid, regulated market place for these products, and contributing to its safe growth and development,” Soussan noted.

On the other hand, Arnab Sen, CEO and Co-Founder of GFO-X, highlighted that institutional investors require a safe and regulated environment to tap into the fast-growing cryptocurrency market. Moreover, the FTX and Alameda Research implosion has been used as a major learning experience by both investors and regulators.

“As the UK’s first regulated and centrally cleared trading venue focused entirely on digital asset futures and options, our joint vision is to ensure digital asset derivatives’ trading and clearing requirements and growing demand can be met within a secure, highly regulated environment,” Sen noted.

The Bigger Picture

The Bitcoin halving event is about 379 days away, which is considered a major trigger of the cryptocurrency bull market. Institutional investors have shown tremendous interest in adding Bitcoin and other digital assets to their balance sheets to hedge against high inflation. Already, over 174k Bitcoins are held by publicly traded companies including MicroStrategy Inc (NASDAQ: MSTR).

The announcement by the London Stock Exchange-backed LCH comes amid a bullish stance in the cryptocurrency market. Notably, Bitcoin price is up over 85 percent YTD to trade around $30,906 on Friday compared to an 8 percent increase in S&P 500 during the same period.



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