CloseCross, a derivatives trading platform built on the Ethereum blockchain, has been granted a European Union MIFID license ahead of its market launch later this month.
According to an announcement emailed to CoinDesk on Tuesday, this is the first time the license has been granted to a blockchain-based derivatives trading platform.
When live, CloseCross will offer multiparty derivative contracts for global stock market indices, cryptocurrency, forex rates, commodities, stock prices, interest rates and others.
The company said it developed and patented its platform, on which traders can enter derivative contracts “without the need of major banks issuing derivatives or having to take on leverage.”
The Ethereum blockchain provided CloseCross with the tech base to “entirely automate the derivatives sector and replace the centralized derivative issuers entirely”, Vabihav Kadikar, CEO of the London and Malta-based company, told CoinDesk.
Kadikar also cited the importance of “creating an immutable trust layer” through smart contracts in the automated calculations and fund flows when multiple traders are entering into a single multiparty derivative contract.
The EU’s second Markets in Financial Instruments Directive, or MIFID II, is designed to increase protection for investors through adding greater transparency to costs and record keeping in over-the-counter (OTC) trading.