Kraken buys Small Exchange to gain US derivatives access

Kraken has acquired Small Exchange, a U.S. derivatives trading platform licensed by the Commodity Futures Trading Commission, from IG Group for 100 million in a deal announced Thursday, giving the crypto exchange immediate access to a U.S. designated contract market and the ability to offer onshore futures and options. The purchase was paid with 32.5 million in cash and 67.5 million in Kraken parent company stock, IG said, and includes a product distribution partnership under which IG will act as a channel for certain crypto products.

Small Exchange’s CFTC designation allows Kraken to operate regulated derivatives trading in the United States, combining clearing, matching and risk-management functions under U.S. oversight. Kraken cochief executive Arjun Sethi said the deal will let the company connect spot trading, futures and margin products in a single regulated system, reducing fragmentation and bringing onshore access and performance that had previously been available mainly offshore.

For IG, the sale delivered a posttax gain of 73.3 million and a 22.7 million boost to regulatory capital resources, the company reported. IG’s share price rose modestly in early trading...