US swap execution facility (SEF) trueEX is due to launch margined, physically-delivered Bitcoin swap contracts via its cryptocurrency marketplace known as trueDigital.
The launch will allow institutional investors to manage their exposure Bitcoin as they do when trading and hedging interest rates, foreign exchange and commodities, trueEX said in a statement.
“We’ve received consistent market feedback that institutional investors want a physically-delivered product because it addresses the challenges and issues that arise from the manipulability of cash-settled derivatives,” added Nick Goodrich, director of business development at trueDigital.
“The product will resemble instruments institutions are comfortable with, and will be a key building block in the institutional digital asset market.”
The Bitcoin swap contracts have been certified by trueEX’s CFTC-regulated SEF and will list on the exchange subject to SEF rules following a ten-day self-certification period. trueDigital plans to list the contracts in the next three serial months with quarterly maturities, and settlement on the last Friday of each maturity month.
trueEX announced plans to roll out a regulated derivatives marketplace for digital assets in March, as it looked to win business from institutional investors entering the cryptocurrency market. The company launched Bitcoin non-deliverable forwards (NDFs) settled in USD, listed under the new brand ‘trueDigital’ on its existing SEF platform.
“Institutional investors and commercial partners are ready for a regulated and liquid marketplace to gain exposure to and hedge these increasingly important digital currencies and commodities,” said trueEX co-founder and CEO, Sunil Hirani, at the time.
“The marketplace is sorely lacking the necessary foundation, infrastructure and platforms that institutional investors have come to expect in other important markets.”
In July, trueDigital also rolled out a set of Bitcoin and Ether reference rates and indices in partnership with 10 market makers including Genesis Global Trading, Circle and Hehmeyer. The reference rates, comprised of bid and offer pricing from top cryptocurrency market makers, include automated anti-manipulation safeguards such as outlier detection and price banding.