LedgerX- a Startup blockchain derivatives provider has been officially registered by The US Commodity Futures Trading Commission (CFTC) as an assigned contract market, which serves to solidify its supervisory profile and efficiently allows the firm to provide physically settled bitcoin futures contracts.
New York Based – LedgerX One of 1st To Market
According to the CFTC, LedgerX’s application for a designated contract market (DCM) license has been approved by the regulatory body, which implies that the company is now able to offer the new futures contracts. Other companies, including Bakkt- owned by Intercontinental Exchange, Seed CX and ErisX intend to penetrate this market. LedgerX is the one of the first companies to receive approval to offer physically settled bitcoin futures; (Although Bakkt’s own futures contracts have been self-certified, the company is waiting for the New York Department of Financial Services to authorize its warehouse).
Retail and Institutional Opportunity
In contrast with the cash-settled bitcoin futures registered by the Chicago exchanges (Cboe and CME), in physically settled futures the purchaser collects the original product when a contract expires, instead of the fiat equal. Not only does this approval mean ledgerX can list these BTC futures contracts, it also means that the blockchain Startup can put forward its products to both retail clients and institutional clients. The recent approval means that New York-based LedgerX can not only list these bitcoin futures contracts but crucially can offer its products to new clients, not just recognized ones.
Although the public was not informed about when exactly LedgerX might start to offer futures, Juthica Chou- chief operating and risk officer of ledgerX revealed that the company was working to be the first provider of this product in the U.S. She revealed they were looking to be incumbent and were strategically positioned to serve clients of all sizes. According to Chou, LedgerX would go through the same self-certification procedure that it previously undertook to propose swaps and options, she added that their new products are not that financially dissimilar to what they’ve been offering, opening them up to a broader market.
Seed CX and ErisX Also Big Players
Seed CX and ErisX have not yet publicized when they would unveil their futures products, and although Bakkt has earlier publicized that it would be trying out its own physically-settled bitcoin futures contracts in July, a fixed unveiling date is yet to be announced.
The Road To Approval
Before ledgerX applied for the designated contract market late in 2018, they already offered swaps and options contracts for customers. The designated contract market application was an addition to their existing Swap Execution Facility and Derivatives Clearing Organization licenses, which authorizes the company’s exchange platform and clearinghouse, respectively. Chou revealed that obtaining the latest approval was a pretty tough process due to the issues involved, and that the new license has about just the same set of responsibilities as the other two.
It is also noteworthy that LedgerX is preparing for a steady rollout of its new products, including its retail-focused Omni platform. Additionally, the company will put out its current swaps and options product to all clients, along with a new block height option product which the company recently self-certified.