Trading On margin

FTX withdraws US derivatives clearing plan from CFTC: Bloomberg

FTX’s derivatives wing on Friday withdrew a proposed plan to directly settle crypto derivatives from the Commodity Futures Trading Commission (CFTC), Bloomberg reported citing a person familiar with the matter.

LedgerX, which does business as FTX US Derivatives after its acquisition in 2021, filed a plan to settle crypto derivatives directly, cutting out intermediaries, earlier this year. The move was met with opposition from traditional financial players, such as Cboe, who warned there could be safeguards and investor protection issues.

The proposal was under review by the Commodity Futures Trading Commission (CFTC), which oversees derivatives in the United States. “I think this is potentially – and I emphasize ‘potential’ – another phase in the evolution of market structure, innovation and disruption,” he said during the conference on the quality of financial markets last month.

In March, FTX.US President Brett Harrison explained that FTX US Derivatives’ current derivatives clearing organization license requires full collateralization of derivatives positions through an intermediary. FTX’s request sought to change this to allow direct trading of derivatives on margin with consumers for retail and institutional clients. The change would allow derivative risks to be “transparently assessed and mitigated in real time” due to FTX’s nearly continuous setting of margin levels, Harrison said.

Read more: FTX.US Derivatives Seeks CFTC Approval to Clear Margin Trades Directly for Clients