Wall Street Crypto Majors Lining Up to Back Startup Prime Broker

    Article Overview

    Bloomberg News reports that a few of the biggest trading houses in the world and cryptocurrency companies are supporting small startups that will help ease the entry of Wall Street into the crypto trading firm. This it intends to achieve by tackling counterparty conflicts of interest and risks.




    Hidden Road Partners, a well-known brokerage firm that focuses on foreign exchange and digital assets, has completed a $50 million funding round in the past month in which Citadel Securities was included, aside from the investment arms of FTX Trading Ltd.’s cryptocurrency exchanges. Coinbase Global Inc. is currently in discussion with hedge funds and the top 20 global banks. The move is being implemented to provide accessibility to hedge or trade their crypto risks, as an executive from the firm revealed.

    The crypto meltdown that occurred recently has increased the importance of the management of counterparty risks. This follows the default by Three Arrows Capital and after Voyager Digital Ltd and Celsius Network Ltd were found to file for bankruptcy protection. This type of credit risk could also jeopardize the traditional funds’ interest in directly trading with cryptocurrency companies.

    For the banking and other institutions that cannot directly hold digital assets, the company allows them to use dollars as collateral in a tri-party setup and receive profits and losses in dollars with a custodian. Clients can trade with the exchanges, as Virtu Financial Inc, Wintermute Trading Ltd, and Optiver BV are liquidity providers.

    Bloomberg News reports that the startup will be entering a crowded space where several crypto brokers and platforms are vying for institutional traders. However, unlike many others, Hidden Road stated that it is a pure-play structure that would help eliminate the potential conflict of interest, like front running a customer’s trade for making a profit utilizing a proprietary trading unit.

    Justin Chow, who is Hidden Road’s head of digital assets, revealed in an interview that Hidden Road is not into trading also added that the company does not make markets, is not involved in over-the-counter deals, and is not engaged in any venture capital. He also said that they are not into selling clients’ data, and it does not extend liquidity as the company’s principle of using their capital and a balance sheet.

    Unlike any conventional bank, Hidden Road is not into carrying a huge balance sheet for lending to its clients. Instead, the company raises capital from the investors in the form of pension funds, and the investors get a return on the capital, which is generated by providing funding to the clients for trading activities. Hidden Road has been mitigating risks by using real-time systems, which helps set the risk limits and needs part of the collateral upfront.



    RELATED ARTICLES

    Monetize Magnet

    Monetize Magnet Review – The Best Crypto and Forex CPA Network

    In today's world, cryptocurrency has reached new heights, expanding continuously and providing online earning opportunities...
    Payback LTD

    Payback LTD Review (Payback-ltd.com) – Find out Why This Fund Recovery Service Provider

    Payback LTD Review Losing your hard-earned money in what seemed like a good opportunity can be...
    Financial Investments

    Understanding Risk Management Strategies for Financial Investments

    In the ever-evolving landscape of finance, understanding and effectively managing risks associated with investments is...
    Debt Management

    Mastering Debt Management Strategies for Long-Term Financial Health

    In the pursuit of financial stability, managing debt effectively stands as a crucial pillar. Debt...
    Index Fund

    5 Key Strategies to Invest Your 1 Lakh Investment in an Index Fund

    If you are an Indian investor with Rs 1 lakh in hand, ready to venture...
    Trading Platforms

    Navigating the Modern Landscape of Online Trading Platforms

    In the ever-evolving realm of financial markets, one of the most significant milestones has been...
    MBA Programme

    Dual Degree MBA Programme: A Unique Educational Opportunity

    In today's world, professional success requires more than traditional management skills. It calls for a...
    women ipl

    Women IPL Sensation Shreyanka Patil: From Fan to Champion

    In a cricketing universe usually ruled by dudes, Shreyanka Patil, the rookie wonder for Royal...
    Monetize Magnet

    Monetize Magnet Review – The Best Crypto and Forex CPA Network

    In today's world, cryptocurrency has reached new heights, expanding continuously and providing online earning opportunities...
    celsius drink

    Celsius Drink – What Is It and How Safe Is It?

    These days, you must come across your social media feeds with an advertisement for a...
    low porosity hair

    Low Porosity Hair Problem? Slay Locks with Moisture Miracle

    Have you ever experienced your hair being stubbornly resistant to moisture? That's low porosity hair...