CFTC Temporarily Approves LedgerX as Swap Execution Facility

The US Commodity Futures Trading Commission (CFTC) has granted a temporary registration to bitcoin options platform LedgerX as a swap execution facility.

LedgerX is aiming to become the first approved facility where physically-settled options on bitcoin can be listed and cleared. The US Commodity Futures Trading Commission (CFTC) wrapped up its extended comment period on their proposal earlier this year. Many in the crypto industry voiced their support, citing the potential benefits of hedging against market risk and the ability to gain insight into market sentiment and Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term.

In a press release, the CFTC stated that "as a next step, the Commission will undertake a substantive review of LedgerX’s application for full registration."

Similarly, LedgerX CEO Paul Chou commented, “This is a first step, and is positive progress, but it is just one milestone toward our ultimate goal. Our mission is still to obtain a derivatives clearing organization license (DCO) to operate a federally regulated bitcoin derivatives exchange and Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term. At this time, we do not intend to launch with only a SEF license.”

As part of efforts to find favor with the regulators, LedgerX enlisted the services of London-based Ancoa, a market surveillance provider for exchanges, to help detect price manipulation.