Japans Largest Broker Nomura Now Offers Bitcoin Derivatives

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-Nomura Holdings Inc, Japan’s largest brokerage and investment bank, began trading bitcoin derivatives contracts to its Asian clients after a rise in institutional demand significantly increased, according to a report from Bloomberg.

-Tim Albers, head of forex structuring in Asia ex-Japan, reportedly said Nomura will offer non-deliverable forwards and non-deliverable options to be settled in cash, as well as bitcoin futures and options contracts, which are further explained below.

-Nomuras first trade was facilitated by CME Group Inc.’s platform with Cumberland DRW LLC serving as the market maker as they specialize in bitcoin and other cryptocurrency based financial derivatives.

-Albers explained Nomura expects the market to mature with time as regulators become more involved with the ecosystem making it more attractive to investors over the long-term.

-The term non-deliverable refers to the underlying asset, which in this case would be bitcoin. For these derivatives, the asset of bitcoin is never actually traded. Only the amount invested into the derivative is traded, hence the underlying asset becomes non-deliverable and settled in cash.

-Options contracts give an investor the right, not the obligation, to purchase an underlying asset. Forwards create an obligation for the investor to buy or sell the underlying asset, while futures contracts are a binding agreement between two parties to buy or sell the underlying asset at a fixed price.

 

 

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