5 top prime brokerage firms for crypto assets
2019 has seen many rapid advancements that demonstrate the growing crypto markets are coming to more closely resemble the traditional markets. So far this year, there have been record trading figures for crypto-backed futures, followed by the announcement of new instruments such as crypto-backed options on futures from Bakkt and CME. The influx of institutional money is creating demand for these products, but also for the kinds of services that are available in the traditional markets. This now includes prime brokerage.
Prime brokerage is a suite of services provided by large investment banks, such as Goldman Sachs or Morgan Stanley, whereby they help to facilitate the trading activities of financial institutions such as hedge funds. Services include the lending of securities or cash, leveraged trade executions, asset custody, or preparation of account statements. However, the core service is single access to global liquidity – meaning an institution can conduct all its trading activities in a one-stop-shop, without having to go to multiple trading outlets.
Until recently, these kinds of services weren’t available in the cryptocurrency markets, and so far, none of the large investment banks has ventured into providing these services to crypto investors. Therefore, several firms are now seeking to fill this gap in the market. Because this is a relatively new niche, there is no “one-size-fits-all” approach to the range of services on offer.
TroyTrade is a global prime broker providing a full-stack integrated trading platform alongside a suite of services for institutional clients and professional traders. The Troy trading platform offers single and direct access to global cryptocurrency liquidity across different instruments, including tokens, futures, and other derivatives. The platform is integrated with all the major exchanges including Binance, BitMEX, Coinbase, Kraken and more, offering unparalleled liquidity across all the spot trading pairs and derivatives traded at these venues.
Alongside the trading platform, TroyTrade also offers sophisticated data analytics features, including blockchain data, trading data, market data, and media data. These are optimized with AI and quantitative models to provide meaningful and accurate sentiment analysis of the cryptocurrency markets. Furthermore, clients get access to a brokerage service with real-time fund transfer and settlement, including margin and OTC services.
TroyTrade is powered by the Troy Network, a decentralized protocol for global trading and settlement. In a similar way to exchange tokens like Binance Coin, holders of the TROY token can access benefits such as discounts on trading and margin lending fees.
TroyTrade was founded in 2018 and is backed by investment firms including Block VC and NGC Ventures. The company is led by Kira Sun, who brings extensive experience in designing crypto asset management products, including BVC16 index fund and Pure Alpha fund.
BCB Group is a regulated financial services provider with a focus on digital assets. Like TroyTrade, BCB Group also provides a trading platform as a gateway to the global cryptocurrency markets, offering execution, settlement, and reporting services to institutional clients. The platform supports trading in ten cryptocurrencies, with native onshore settlement in GBP, USD, EUR, CHF, and ZAR or wholesale FX rates for other currencies.
BCB’s trading channels include a web UI, encrypted voice and messaging channels, and a low latency API covering live pricing, trading, and reporting. Compliance is covered through a multitude of real-time transaction and position reporting options.
Founded in 2017, the company is based in London and is regulated in the UK and Switzerland. Alongside the trading platform, the company also offers custody services for digital assets and business accounts to blockchain-based companies.
Quantreq is a cryptocurrency and digital assets capital markets firm. The company provides a variety of services to institutions, including portfolio margin trading, crypto fund administration, and prime brokerage through its QTrade Prime platform.
Using QTrade Prime means crypto funds only need to open one account with Quantreq for trading across 20 exchanges covering spot markets, crypto derivatives and options, and Quantreq’s institutional cryptocurrency lending desk.
The company also gives users access to its multi-signature treasury hot wallet, which enables fast funding of custodial counterparties for quicker trading. The wallet is fully insured. Quantreq also makes its institutional research from market analysts available to users.
Quantreq was founded in 2018 and serves clients in North America, Europe, and Asia.
Tagomi is a cryptocurrency brokerage firm offering a range of services to institutions and individual investors and traders. The trading platform provides access to 14 exchanges via a single account. The company also provides margin, shorting, and lending, along with secure multiparty custody services. Tagomi also commits to providing the details underlying the price of every trade on its platform, as a way of ensuring transparency.
Tagomi’s platform went live at the end of 2018, and the company launched its lending feature in Q3 2019. It has backing from partners including Paradigm and Pantera Capital and was the 18th company to receive the New York Bitlicense.
Caspian provides a complete asset management solution. Like the other companies listed here, it provides a single gateway to multiple trading venues. However, the Caspian software also offers other benefits, including a portfolio management system, compliance, and risk management, along with a reporting feature.
Caspian is a joint venture between two companies – Tora Trading Services and Kenetic Trading Systems. Tora is a leading order execution management trading platform for equities and derivatives, while Kenetic is a proprietary trading and investment firm focusing on digital assets and blockchain-related companies. The management team behind Caspian is made up of senior executives from both companies, combining expertise in software, investment, economics, and blockchain development.
The emergence of prime trading services is yet more evidence that the cryptocurrency markets are growing up. Over time, it’s likely that more firms, and perhaps even the existing prime brokerage providers from the traditional markets, will enter the digital asset space. If this happens, the incumbents will have to up their game to ensure they’re providing a broad range of world-class services, making them invaluable to their clients.
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