LMAX just announced they would be offering cryptocurrency liquidity geared for Institutional Investors. Banks and Hedge funds will now be able to trade Bitcoin, Bitcoin Cash, Ethereum, and Ripple. The cryptocurrency market has been geared for the retail investor with sites like Coinbase. Coinbase and its platform our simple for cryptocurrency trading but not designed for an Institutional Investor.
Institutional Investors see a growing interest in Cryptocurrencies but are hesitant to add them because of platform limitations and security issues. LMAX is now offering a cryptocurrency exchange that provides a sophisticated platform and a secure environment that meets the requirements of Institutional Investors.
It is not entirely surprising that Prime of Prime Brokers makes a move towards cryptocurrencies. At its peak in the forex market, we saw the creation of platforms like Currenex and Integral which were designed for Institutional Investors. The trend is most likely to continue with the LMAX platform among others that will eventually reach the market.
Institutional Investors are looking for a trading system that offers low latency trade execution. LMAX will be providing their products via LD4 which a renown data center in London used by many Institutional Investors. Institutions would also require that trading is offered via FIX or the Financial Information Exchange which is the standard protocol for trading among banks and brokers. Another requirement of Institutions is the depth of liquidity. One of the most significant challenges with the other crypto exchanges has always been liquidity since operate independently and are decentralized. Custodial services are essential for Institutional Investors in there must be ease of settlement and custody.
LMAX seems to have taken a giant step in what will most likely be a continuing trend. We will most likely see additional Prime of Prime brokers creating offerings for the cryptocurrency market.