LCH, the world’s largest derivatives clearing house, and a London Stock Exchange Group (LSEG) subsidiary, has launched its dedicated clearing venue for digital asset derivatives, LCH DigitalAssetClear. It provides central clearing for GFO-X, a UK regulated trading venue for digital asset derivatives, starting with bitcoin index futures and options. The first live GFO-X transaction took place between Virtu Financial and IMC.
GFO-X attracted a $30 million Series B funding in late 2023, after landing a license as a multilateral trading facility (MTF) from the UK’s Financial Conduct Authority the previous year. UK asset manager M&G led the funding and is the largest shareholder, controlling more than a quarter of the company’s stock but less than half.
“The launch of GFO-X is a further foundational step toward increased institutional digital asset derivatives trading, providing the infrastructure, central clearing, robust risk mitigation, and liquidity,” said GFO-X CEO, Arnab Sen. “With our first trade executed between two leading financial institutions providing deep liquidity, we are expanding the market for centrally cleared digital asset derivatives.”
Initial GFO-X market makers and participants include IMC, Nomura’s Laser Digital and Virtu Financial. Nomura is also one of the clearing participants in LCH DigitalAssetClear, alongside ABN Amro and Standard Chartered.
The launch of GFO-X coincides with increased institutional interest in crypto derivatives. Last week Coinbase announced the $2.9 billion acquisition of Deribit, the options exchange. Two months ago Singapore’s SGX unveiled plans to launch perpetual futures.
For mainstream institutions, there’s a need to ringfence risks, especially given the volatility of crypto markets. That’s a key reason why LCH DigitalAssetClear has fully segregated the entity, including with a separate default fund.
“It is essential that we find ways to offer regulated, segregated and trusted routes to provide customers with a diverse breadth of services and we are excited to continue working with GFO-X to offer a regulated marketplace for this asset class,” said
Marcus Robinson, Head of DigitalAssetClear and CDSClear, LCH.
