Tag Archives: Bitcoin options

Bitcoins Become Trading Firms’ Focus

MarketsMuse blog update profiles how the increasing interest in bitcoins is leading some investors in opening bitcoin financial services firms. Many believe that this move can help reduce the volatility and increases favorability of bitcoins.  This update is courtesy of the Wall Street Journal’s article, “Big Investor Involvement Could Boost Bitcoin“, with an excerpt below.

Some of the U.S.’s biggest proprietary traders and investors are testing the waters for a bigger move into bitcoin, giving a potential boost to the fledgling virtual-currency industry.

While still cautious of becoming exposed to “cryptocurrencies,” some of the firms, which trade with their own money on the.ir own behalf, say they see potential for big profits in trading bitcoin as more investors enter the market and financial-services firms use the currency to streamline transactions.

Their involvement could help reduce volatility in the market for bitcoin, which has struggled to gain legitimacy in part because of concerns about wild swings in its price.

Among the companies at the forefront of this move is DRW Holdings LLC, a high-frequency trading firm in Chicago founded by former options-pit trader Donald Wilson in 1992. DRW is a founding investor in a new bitcoin financial-services firm called Digital Asset Holdings that launched last month. Cumberland Mining & Materials LLC, a DRW subsidiary, has “begun to experiment with cryptocurrency trading,” DRW said.

To continue reading the article on bitcoin firms from the Wall Street Journal, click here.

 

The 1st Regulated Bitcoin Bourse? Frmr Goldman Sachs Algo Trader Pitches LedgerX as a Regulated Exchange

MarketsMuse.com update courtesy of extracts from today’s edition of Traders Magazine.

Yet another coin is being tossed into the fountain of Bitcoin dreams and wishes. The latest aspirant and first to file a full-blown registration for a “Bitcoin Bourse”with the CFTC is “LedgerX”, a company led by former 6-pack broker-dealer and MIT Alumni Paul Chou, who was most recently a Goldman Sachs trader.

According to the filings, LedgerX hopes to become a fully-regulated derivatives exchange clearing house. While at Goldman, Chou was responsible for developing, trading and risk managing algorithmic equity trading strategies for U.S. and Japanese markets. Also, he developed a set of cross-asset strategies and devised a method to unify and optimize the trade flow across hundreds of trading algorithms. Prior to Goldman, Chou delivered trading and spread-risk tracking tools on projects for Citadel Investment Group and Morgan Stanley.

Chou, who serves as chief executive officer of LedgerX, is designing the exchange and currently has filed registration papers, bringing the bourse one step closer to reality. LedgerX’s registration, filed with the CFTC, is open for public comment until Friday, January 30th. On December 15th, the CTFC requested comments on the LedgerX submission.

If approved by the CFTC, LedgerX would be the first federally-regulated Bitcoin options platform and clearing house to list and clear fully-collateralized, physically-settled Bitcoin options for the institutional market. LedgerX has also applied for registration with the CFTC as a swap execution facility and as a derivatives clearing organization on September 29, 2014.

LedgerX is backed by several high profile investors such as Google Ventures and LightSpeed Ventures. Also, Jim Newsome, former chairman of the CFTC and former chief executive of NYMEX, and Tom Lewis, former CEO of both Ameritrade and Green Exchange, currently sit on the LedgerX board of directors.

Simultaneously, to build a Bitcoin derivatives market, he is bringing together corporations seeking to hedge their Bitcoin exposure and financial institutions searching for trading and investing opportunities in Bitcoin.

According to Chou, more than 80,000 entities accept Bitcoin, including brand names such as Dell, Expedia and PayPal.