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Get Ready for Crypto Derivatives Trading!

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– The volatility and collapses in the crypto sector have highlighted the need for traditional market risk and credit management, and contractual standards according to market participants.

– Purvi Maniar, deputy general counsel at FalconX, and Nicola White, chief executive of B2C2 USA spoke to Scott OMalia, chief executive of ISDA, about turbulence in crypto on the derivatives trade organisations podcast The Swap.

– White was named head of B2C2s U.S. entity in May this year. She previously worked at Citadel Securities as global chief operating officer of fixed income and was global head of electronic markets within the fixed income division at Morgan Stanley, during which time she automated interest rate trading.

– Crypto market maker B2C2 was founded in 2015 and is majority owned by Japanese financial group, SBI.

– The shakeout over the last few weeks has hindered the sentiment for crypto according to White, but she is encouraged by the industry coming together to find creative solutions for some of the credit exposures and losses that have occurred.

– White agreed that increased demand for crypto from the traditional financial firms has continued but clients are looking for changes in three areas certainty of execution and settlement; price transparency and the ability to seamlessly transfer large risks.

– Standardisation is important for adoption in the crypto space according to Maniar.

– OMalia continued that the recent volatility makes it even more important to have a robust set of contractual standards for OTC crypto derivatives markets which is being addressed by working groups.

– ISDA will launch a contractual framework that includes cash settled forwards and options referencing bitcoin and ether by the end of this year.

– The biggest immediate efficiency that blockchain can impart is enabling a more real-time settlement according to White.

 

 

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