Understanding OTC Clearing Facility

Over-the-Counter (OTC) trading allows two distinct counterparties to agree on a trade directly, outside of the Bullish exchange order book.

Customers must directly negotiate trades outside the Bullish Exchange order book - whether through bilateral negotiations or a third-party RFQ platform, and then submit those trades to Bullish OTC Clearing Facility.

The Facility allows our customers to benefit from Bullish’s carefully designed risk and collateral management, without requiring them to use Bullish’s orderbook to find and negotiate with their trading counterparty(s).

The Facility is available for clients eligible to trade derivatives, including Options, Dated Futures, and Perpetuals. It covers all markets that are available on the Bullish Exchange. Clients may request the creation of bespoke markets via their Bullish relationship manager.

For market transparency, all OTC trades cleared through Bullish are publicly reported as part of trading volume.

1. After reaching agreement on an OTC trade, customers can submit their OTC trades via API or the Bullish trading system User Interface to be booked for clearing and settlement. Both parties must be existing customers of Bullish who have access to the Facility.

2. Both customers must enter the consistent and opposite trade details in order for it to be accepted. Also, each customer must agree their role as Maker and Taker in the transaction.  

3. To ensure a successful match, they must submit the trade with a matching sharedMatchKey within a one-hour window before the instruction expires.

4. Upon successful trade booking, the OTC trade between the two counterparties will be novated to BGI for clearing and settlement.

Bullish uses existing Portfolio Margin calculations to ensure that your portfolio can support the margin requirements of a new OTC trade. Margin checks are performed for both the maker and the taker at the moment the trades are matched.

Each counterparty must have sufficient margin to cover the OTC trade in their respective accounts for the trade to be accepted by Bullish.

The positions from OTC-cleared trades are incorporated into Bullish’s unified risk management system and with consistent treatment as positions created from orderbook trading.