Due to the increasing demand from institutions, the London Stock Exchange (LSE) will provide clearing services for Bitcoin derivative contracts.
London Stock Exchange announce It will use its Paris arm, its clearinghouse branch, LCH, to handle bitcoin futures and options contracts on GFO-X.
GFO-X is a UK-based regulated digital asset exchange. The service will be operational by the fourth quarter of 2023 if regulatory approvals are favourable.
Institutional demand for bitcoin
As some institutions are reluctant to hold bitcoins due to regulatory challenges, there is a demand for cryptocurrency derivatives trading. A clearing house assists institutions as a middleman to help manage the risk if one side defaults.
According to the financial timesLCH will settle the derivatives in cash and maintain the margin for the crypto unit separately. Arnab Sen, co-founder of GFO-X says:
Recent market events in digital asset trading have highlighted the need for a safe and regulated place where large financial institutions can trade at scale, while still protecting their clients’ assets. LCH offers proven risk management capabilities across a range of asset classes and some of the most sophisticated clearing services in the financial markets today. As the UK’s first regulated and regulated trading venue to focus entirely on digital asset futures and options, it is our shared vision to ensure that the trading and clearing requirements of digital asset derivatives can be met and that growing demand can be met in a highly secure and regulated environment.
Is the UK lagging behind France in the race to attract Web3 companies?
The move from LSE comes as France has recently attracted major Web3 players. according to bloombergCompanies like Binance, Crypto.com, and Circle have all chosen Paris as their European base.
When Crypto.com chose Paris as its European headquarters, Ripple’s Ian Burge chirp“If the UK is serious about becoming a hub for blockchain and cryptocurrency, mere words will not get it done. Crypto.com’s decision to feature in Paris is a clear win against London. We need to do more to attract the industry.”
Moreover, the peers of the London Stock Exchange, such as CME Group, CBOE Global Markets and Deutsche Börse, are already offering the facility to trade cryptocurrencies backed by traditional products such as derivatives.
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