GFO-X, which is regulated by the Financial Conduct Authority, is a centrally cleared trading venue dedicated to digital asset derivatives aimed at global institutional investors.
The companies said on Thursday (13 April) that LCH SA, an LSEG business, will introduce a new, segregated clearing service called DigitalAssetClear for cash-settled bitcoin index derivatives traded on GFO-X. The launch is currently scheduled for Q4 2023, subject to regulatory approvals.
Treasury sets out plans to regulate crypto
GFO-X and LCH SA have been working with an advisory working group comprising the world's leading investment banks, trading firms and liquidity providers to optimise product design and risk methodologies, they added.
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.
"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."
Baby steps of crypto regulation not enough to spur asset management interest
Frank Soussan, head of LCH DigitalAssetClear, added: "Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with.
"Offering centralised clearing for these cash-settled dollar-denominated crypto derivatives contracts on GFO-X is an important development for the market. The service is a powerful combination of GFO-X's high-performance technology and optimised contract specifications with LCH's proven risk management capabilities."
Earlier this year, the UK, which aims to become a global hub for crypto technology, launched a public consultation on future regulation for cryptoassets, which are currently unregulated.