FTX Withdraws US CFTC Derivatives Clearing Plan

The company previously submitted a plan that it hoped would allow customers to assess and respond to derivatives risks in real time.

AccessTimeIconNov 11, 2022 at 7:42 p.m. UTC
Updated May 9, 2023 at 4:02 a.m. UTC
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FTX's derivatives wing withdrew a proposed plan to directly settle crypto derivatives products from the Commodity Futures Trading Commission (CFTC) on Friday.

The story was first reported by Bloomberg.

LedgerX, which does business as FTX US Derivatives after being acquired in 2021, filed a plan to directly settle crypto derivatives, cutting out intermediaries, earlier this year. The move met with opposition from traditional financial players, such as Cboe, which warned that there may be investor safeguard and protection concerns.

The proposal was under review by the Commodity Futures Trading Commission (CFTC), which oversees derivatives products in the U.S. CFTC Chair Rostin Behnam, while not endorsing the plan directly, nonetheless called it "unique" earlier this year. "I think this is potentially – and I emphasize the 'potential' – another phase in the evolution of market structure, innovation and disruption," he said at the Financial Markets Quality Conference last month.

In March, then FTX.US President Brett Harrison explained that FTX U.S. Derivatives’ current derivatives clearing organization license requires full collateralization of derivative positions through an intermediary. FTX’s application had sought to amend that to allow for direct-to-consumer margined derivatives trading for retail and institutional customers. The change would allow derivatives risks to be “transparently assessed and mitigated in real time” because of FTX’s almost continuous setting of margin levels, Harrison said.

Update on 11/14 at 14:28 UTC: CFTC confirms that FTX US Derivatives on Friday formally withdrew its application.

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