Bitcoin derivatives provider Seed CX has begun testing its margin swaps products with users, the company said Tuesday.
Investors can now onboard to try out Seed CX’s swaps product matching platform during the testing period through its subsidiary Seed SEF, a regulated swap execution facility (SEF), the company announced
Seed CX’s CEO Edward Woodford told CoinDesk that the testing would
allow market participants to test both their connections to the
marketplace, as well as the products themselves “to ensure they are
working as expected.”
“We’re very excited to have begun user testing of our
physically-settled bitcoin derivative product,” said Seed CX president
Brian Liston in a statement. “We’re at the final step.”
Woodford told The Block that the company could launch its live swaps product over the next three months.
“The three-month timeline is not firm, as we are waiting on
regulatory approval and therefore it is not in our hands to control,” he
clarified to CoinDesk, adding:
“We are ready from a technology standpoint. The other
factors that can influence our timeline is the regulators’ views on
these products.”
In his statement, Liston said that once testing is concluded
successfully and regulators have reviewed, the company “will be able to
launch a much needed margined, physically-settled digital asset
derivative to U.S. customers.”
Race to market
A number of firms are looking to offer physically-settled bitcoin
derivatives, in which clients receive the actual bitcoin underlying a
contract on expiration, in the U.S. To date, LedgerX is the only one to
provide swaps and options products, which it offers to both
institutional and retail clients.
However, Seed CX wants to become the first to offer
physically-settled products on margin, meaning investors can enter a
leveraged position.
The company has previously announced its intention to offer bitcoin
forwards, a product similar to the bitcoin futures that Intercontinental
Exchange’s Bakkt, LedgerX and ErisX are hoping to offer customers.
TrueDigital is also looking to launch bitcoin forwards.
While futures are standardized contracts traded on an exchange,
forwards can be customized between parties and are traded
over-the-counter. Clients can use both to bet on the price of bitcoin at
some future date.
According to Tuesday’s press release, Seed CX intends to offer nine
different contracts simultaneously: four weekly contracts, three serial
monthly contracts and two quarterly monthly contracts. Weekly contracts
will expire on Fridays, while the monthly and quarterly monthly
contracts will expire on the third Friday of the relevant months.
Seed CX, the parent firm to Seed SEF, launched a bitcoin spot trading market in January, offering institutional clients trading and settlement services.
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