Japanese financial services giant Nomura has launched bitcoin derivatives for its institutional clients. The first trades were executed by Cumberland DRW on behalf of Nomura on the CME.
Over-the-Counter BTC Futures and Options
Nomura’s over-the-counter bitcoin futures and options will be available to institutional clients. They will be non-deliverable and have to be settled in cash, media reports said.
Talking about the partnership with Cumberland DRW, Nomura’s head of markets, Asia ex-Japan (AEJ), Rig Karkhanis, said in a statement, “Working with institutional-grade counterparties will allow us to scale into the increasing demand from our clients.”
Derivatives During Digital Assets Meltdown
Although crypto markets are in a bearish mode for the past few months, the demand from institutional and private investors for such services has been growing, forcing global investment banks to expand into the industry.
The current meltdown that left the crypto market with a $300 billion setback in just four days will likely spur the demand for greater regulation.
“We expect the sector to mature over time, to become more regulated, which makes it more attractive for an institutional investor,” Tim Albers, head of Forex Structuring, AEJ, Nomura, said.
At a time when bitcoin has shaded more than half of its value since the all-time high of $69,000 in November 2021, it could be just the right time to launch more derivatives related to BTC, the executive opined.
“There has been significant volatility recently. Once the dust settles, valuations will become more attractive for institutional clients. We’re pretty excited to get this off the ground as the launch marks the start of our journey into the space for the global markets business,” Albers said.
Nomura as First Crypto Custody Bank
Nomura’s interest in crypto dates back to May 2018, when it became the first crypto custody bank through a new venture called Komainu. It partnered with crypto security and infrastructure solution provider Ledger and bitcoin-specialist investment manager Global Advisors.
Storage and security concerns had been a major bottleneck in large-scale investments in cryptocurrencies from investment bankers. The move was expected to unlock institutional investors’ interest in digital assets.
In July 2020, it launched a custodial service for traditional investors through Komainu in partnership with Ledger and investment company CoinShares. Komainu is the first regulated digital assets custody solution built by institutions for institutions, the company claimed.
Featured Image Courtesy of GlobalCapital