trueDigital to List First Margined, Physically Delivered Bitcoin Swaps

News | October 3, 2018 By:

trueDigital, an affiliate of Commodities Futures Trading Commission (CFTC) regulated swaps execution facility trueEX, will launch the first margined, physically-delivered bitcoin swap contracts. The move enables institutional investors to manage exposure to bitcoin in a way similar to how they currently trade and hedge interest rates, foreign exchange (FX) and commodities.

The trueDigital derivatives contracts have been self-certified by trueEX’s CFTC-regulated swap execution facility (SEF), and will be listed on its exchange subject to SEF rules after a ten-day self-certification period.

Physical delivery of a derivatives contract requires the underlying asset to be delivered upon the contract maturity date. This differs from the prevailing method of cash-settled derivatives, which has come under scrutiny as anonymous spot pricing contributions on unregulated exchanges are more susceptible to market and price manipulation.

“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,” said 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.”

trueDigital will initially list contracts in the next three serial months and quarterly maturities, with settlement on the last Friday of each maturity month.

Formed in March 2018, trueDigital is launching a regulated derivatives marketplace for digital assets. This follows the launch in July this year of the first market maker-based Bitcoin and Ether indices for institutional markets, to which ten market makers have agreed to contribute or plan to contribute, including Genesis Global Trading, Circle, XBTO Group, DV Chain, Hehmeyer, Altonomy, Tilde, and Elwood.

The self-certification filing made to the CFTC is available on