A new bitcoin derivatives trading platform called Crypto Facilities has launched in London, backed by a pair of co-founders with longtime experience in the City's traditional financial markets.Crypto Facilities currently lets customers trade just one instrument, a forward contract on the bitcoin price.It currently offers the contract with three expiry dates.A trader can lock in the price of a bitcoin by selling or shorting a forward.The platform's pedigreed co-founders are Timo Schlaefer, a former executive director at Goldman Sachs in London that worked on credit quantitative modelling, and Jean-Christophe Laruelle, who formerly built trading platform systems for BNP Paribas and Societe Generale.Schlaefer is coy about his Goldman experience, saying that he isn't comfortable discussing his history at the firm.He said, however, that he left his role there in order to work on Crypto Facilities full-time."I left [Goldman] to do this, basically," he said."It is not something you can just start with two weeks of preparation time."

Schlaefer's contacts in high finance have come in handy, as he courts institutional traders who want to get involved with cryptocurrencies, although he wouldn't confirm if any professional investors are trading on his platform, citing client confidentiality.Crypto Facilities is launching in a still nascent bitcoin derivatives market.Some 806 contracts have been traded for the March forward and about 550 contracts traded for both forwards with later expiry dates, which Schlaefer said he considers "pretty liquid".Perhaps the best known cryptocurrency derivatives issuer is TeraExchange, which is registered with the US derivatives regulator.It made waves last September with its own bitcoin forward, which it touted as the first bitcoin-linked instrument to be traded on a regulated platform.TeraExchange doesn't publish its bitcoin forwards volume data.Hong Kong-based BitMEX is another, run by former finance professionals, that has worked to introduce a range of novel instruments to the digital currency space.

Among these is a 'fear index' for bitcoin, which tracks the digital currency's volatility and allows traders to make bets on its movements.litecoin gift cardGrowing trading volumes on derivatives exchanges should eventually translate into more stable bitcoin spot prices, says Colin Kwan, a former business analyst of futures and options at UBS who is now chief operating officer at leveraged trading provider BTC.sx.dell welcomes bitcoin payment"Just like the traditional markets – going back to wheat and gold – because of the volatility of the weather and things like that, it made commerce very unstructured.kurs bitcoin litecoinIt was simple derivatives like forwards that actually normalised the market," he said.bitcoin visual studio 2012

"When you start talking about big sums of bitcoin, big movements, then derivatives will reduce volatility and provide a lot more efficiency."is litecoin safeCrypto Facilities joins other newly launched UK exchanges in attempting to get under a regulatory umbrella even as the regulatory regime in the jurisdiction remains in flux.fca and bitcoinThe new exchange's strategy is to use the services of a "regulatory host", a company that complies with the rules of the Financial Conduct Authority (FCA), the UK financial regulator.The host, a firm called Met Facilities LLP, is registered as a financial services firm with the FCA.In turn, it has made Crypto Facilities an appointed representative, meaning it has to ensure the crypto exchange complies with the FCA's rules.If there's a breach in conduct by the crypto exchange, the host gets the blowback from the regulator.

But the arrangement is, to some extent, marketing on the part of Crypto Facilities, since bitcoin doesn't fall under the FCA's purview, a fact that Schlaefer readily acknowledges."Bitcoin forwards are not part of the regulated activities per se ...What we do is apply the same risk management and compliance framework [to bitcoin forwards trading]," he said.A London exchange launched last month, DSX, uses a similar arrangement, except the same management team runs both the regulated entity and the crypto exchange.Another exchange, LazyCoins, successfully registered with the UK tax authority as a Money Services Business in a bid to come under official scrutiny.Bhavesh Kotecha, a managing partner at Met Facilities, said his firm has received enquiries from about 10 cryptocurrency firms seeking 'regulatory hosting' services in the last year, suggesting that this may prove to be a popular route to regulation for UK firms.For Schlaefer, a bitcoin derivatives platform is just the first iteration of what he hopes will be a long involvement in digital currencies: "Bitcoin is a special realisation of the blockchain technology ... Whatever the new use of the blockchain technology will be, it's probably going to be some crypto asset, some sort of virtual asset.

If you have a framework for how to trade this asset, how to hedge risk and so forth, I think that's quite valuable."QuedexBitcoin derivatives exchangeFutures and optionsLog inRegisterSecure your profits100% secureAll bitcoins held in cold storageEnd-to-end encryption in web app and APIAuction & Continuous tradingInnovative liquidity models protect your hedging profitsNo more flash crashes and market manipulationsFutures and OptionsOptions trading fully integrated with futures marketsNaked options selling with leverageProfit from every market scenarioA group of students from Boston University has set out to build a commodity derivative exchange for digital currencies, allowing those who hold large amounts of bitcoin to hedge against market volatility.Alt-Options, co-founded in June 2014 by Joe Zhou, Kevin Foo and Marco Cuesta, aims to act as the Chicago Mercantile Exchange for bitcoin, allowing digital currency derivatives to be publicly bought and sold instantly on its platform.The new platform launches in this month with a competition in collaboration with the College Cryptocurrency Network .

For the uninitiated, financial derivatives are simply contracts agreed upon between two parties: whoever holds the asset, in this case, bitcoin, and whoever wants to speculate on the future price of the asset.One of the most popular types of derivatives, a call, is defined as the right to purchase an asset at a preset price, called a strike price, before some date in the future.Should the market price increase above the strike price, the option owner purchases and immediately sells the asset, pocketing the difference.In exchange for signing the contract, the option purchaser pays whoever owns the asset a small fee.Asset owners enter into these types of contracts for the guaranteed income, and the option purchasers are incentivized with the large upsides associated with this type of trading.Other popular financial derivatives include puts, where the option owner reserves the right to purchase an asset at a specific price up until a period of time, and futures, where the owner must purchase the asset at a specific price on a specific day in the future.

Users can purchase financial derivatives offered by Alt-Options in order to both speculate on large bitcoin price movements and decrease volatility.For instance, if a user believed the price of bitcoin was going to increase above $300 sometime in the next six months, he or she could purchase a call at $300 for a small fee.If the price were to reach $350 before six months passed, the user would exercise his option, the bitcoin would be sold on the open market, and the user would pocket $50.If the user’s prediction proved incorrect, the asset owner who sold him the option would simply keep the small fee.However, if a user wanted to protect herself from a price drop below $250 in the next six months, she would purchase a put at $250 on her personal balance of bitcoin on the Alt-Options platform, again paying a small fee.Should the price fall below $250, she would exercise her right to sell her bitcoin for the strike price of $250, protecting her from volatility in the bitcoin market.And while this arrangement may not seem revolutionary, calls and puts play an important role in the world market today by allowing large players to hedge against large swings in the market.

Financial derivative exchanges have been lucrative for years.Founded in 1898, the Chicago Mercantile Exchange took in $3 billion in 2010.At the end of March 2008, the notional amount of all outstanding positions stood at $81 trillion, according to the Bank for International Settlements.While Alt-Options is currently regulated by Financial Crimes Enforcement Network (FinCEN) regulations, it has been able to bypass stricter guidelines by using “strong partnerships with regulated (bitcoin) exchanges,” said Alt-Options co-founder Joe Zhou in a recent interview.“There are no specific guidelines regarding digital assets, but we foresee some sort of regulation or set of guidelines from the U.S.Commodity Futures Trading Commission in the future.” Alt-Options aims to find the same volume that allowed Chicago Mercantile Exchange to prosper with bitcoin trading.With tools typically found on pro-trading platforms and American-style options for retail clients, a team of students is hoping to revolutionize the way mining firms liquidate assets, hedge risk and manage the incredible amounts of bitcoin they generate every day while allowing casual and professional traders to experiment with bitcoin.