Financial Company LCH Granted Permission To Clear Bitcoin Index Derivatives

London Clearing House (LCH) has received regulatory authorization to process cash-based Bitcoin index stocks and options contracts.

The Chief Executive Officer of LCH, Corentine Poilvet-Clédière expressed excitement for receiving regulatory clearance to introduce this new service. He added that the service will allow institutional traders to clear and trade cash-settled Bitcoin index futures and options in a familiar regulated environment. This will enable them to leverage LCH SA’s tested risk management competencies.

The Firm Plans To Offer Clearing Service Via Its DigitalAssetClear

The company will offer clearing services via its newly launched DigitalAssetClear platform for cash-based Bitcoin index stocks traded on GFO-X, a UK-based cryptocurrency derivatives trading platform.

LCH’s DigitalAssetClear is set to launch in the next few months. It will manage a fully isolated clearing service -comprising a partitioned default fund and a specialized set of clearing regulations for traders handling these instruments.

LCH is a financial infrastructure company that offers clearing services to top global exchanges and various OTC markets. Its headquarters is located in London. The LCH Group comprises two major entities: LCH SA based in Paris and LCH Limited situated in London.

Since 2012, LCH has cleared about half of the global interest rate derivative market and was the world’s second-biggest clearer of repos and bonds, offering services in 13 government debt markets. Additionally, LCH clears a wide array of asset classes such as foreign exchange, freight derivatives, interest rate swaps, energy contracts, credit default swaps, exchange-traded derivatives, securities, and commodities.

LCH’s EquityClear Service Provides Clearing For Stocks And Equity Equivalents

LCH’s members include several leading international financial institutions with participation from almost all of the top investment banks, global commodity houses, and broker-dealers. Functioning as a clearing house, LCH stands between a trade.

It takes on the counterparty risk associated with two parties trading and ensuring that the trade is executed. To reduce the risk, it enforces certain minimum criteria on its members and obtains variation and initial margin from them for executed trades.

LCH clears assets like steel, plastics, and non-ferrous metals which are available for trade on the London Metal Exchange. It also clears over-the-counter products such as steel and iron ore, fertilizer swaps, steel, coal, and gold.

LCH’s equity trade clearing service, EquityClear, provides clearing for stocks and stock equivalents like exchange-traded bonds, real estate investment trusts (REITs), exchange-traded commodities (ETCs), and exchange-traded funds (ETFs). The company clears equity trades executed on Equiduct, Bourse de Luxembourg, NYSE Euronext, BATS Chi-X Europe, SIX Swiss Exchange, and the London Stock Exchange (LSE).