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CFTC considers FTX proposal for direct clearing of crypto derivatives

A new approach to crypto derivatives could signal big structural shifts for traditional financial derivatives away from intermediaries and central clearing.


As investors watch bond and equity markets fall, some are doing better than others. On April 27, the CME reported to its shareholders that average daily volume (ADV) in futures and options in the first quarter of 2022 was 19% higher than in the same period in 2021, with quarterly equity index volume up 30% to record levels.

ADV also grew 21% in the bigger interest rate derivatives markets. And the Chicago exchange gathered a record $152 million in quarterly revenue just from selling and licensing market data.

Volatility is good, as long as it stays moderate.

“With the backdrop of ongoing geopolitical uncertainty, evolving central bank policies, inflation, supply-chain constraints and other economic challenges, risk management has never been more important,” Terry Duffy, chairman and chief executive of the CME, told analysts.

Risk management has never been more important
Terry Duffy, CME

While the Nasdaq is in a bear market, having fallen 22% over the first four months of this year, CME shares are down just 2.7%.

But there’s a dark cloud looming on the horizon.

FTX US, the US subsidiary of FTX, the three-year-old crypto exchange that hit a valuation of $32 billion in a series-C fund raise in January (which puts it ahead of the present market capitalization of Coinbase), has applied to the Commodity Futures Trading Commission (CFTC) to allow a radical change in crypto derivatives markets that could also signpost a new structure for the conventional futures and options world.


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