The London Stock Exchange Group (LSEG) is set to offer a regulated platform for trading crypto derivatives, the company announced today.
LSEG said the platform would be run by LCH, its French clearing arm, and GFO-X, a marketplace for digital assets, which is regulated by the Financial Conduct Authority.
Their joint venture will be called LCH DigitalAsset Clear.
Derivatives allow investors to speculate on the price movements of underlying assets without owning the asset itself. Asset managers and traders have turned to bitcoin derivatives in recent years because of regulations making it hard to deal in bitcoin directly.
Frank Soussan, head of LCH DigitalAssetClear, said institutional investors wanted to trade bitcoin but that they needed “a framework which they are familiar with and comfortable with, which at this stage is traditional market infrastructure, a regulated market venue”.
Arnab Sen, CEO 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.”
“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”, he added.
LSEG hopes the exchange will be up and running by the fourth quarter of this year, subject to regulatory approval in Paris.
The news comes as leading cryptocurrency Bitcoin roared past the $30,000 dollar mark for the first time since June last year this week as investors poured back into crypto in a bet on the end of rising interest rates.