just now
Monday - Banks candidly speaking with Fireblocks
The conversation between Ryan Goldshtein, Chief Payments Officer at Fireblocks, and Carolyn Weinberg of BNY Mellon was one of those exchanges that begins as a technical discussion and ends by revealing where the real centre of gravity now sits in institutional finance. It’s remarkable that an investment bank would even be on a podcast, let alone with a crypto-native infrastructure provider!
They were discussing stablecoins moving to a 24/7 settlement model. Ryan made the point that, when a stablecoin transaction occurs after Fedwire has closed, the reserve money held at BNY Mellon must also be able to move. Otherwise, the parties on either side of the trade would be left in a rather awkward position.
He referred to a Treasury trade settled after hours between Ripple and Dreyfus. The implication was straightforward: if stablecoins are to function as settlement instruments beyond traditional market hours, then the underlying reserves, cash, and Treasury positions must be capable of moving too.
Carolyn’s response was refreshingly candid. In its simplest form, she explained, one could have Stablecoin A and Stablecoin B, with reserves held at BNY. If someone wished to move from one stablecoin to the other, there would be a burn and an internal transfer of cash from one account to another.
Carolyn noted that frameworks and controls exist to enable such transactions, and that BNY is focused on extending the Treasury market’s operating hours. Tokenised deposits, she suggested, offer a useful mechanism for enabling these transfers, as do tokenised Treasuries alongside their traditional counterparts.
This is why the extension of Treasury market hours matters so much. It is not merely a convenience for traders who wish to react to news at inconvenient hours. It is a prerequisite for stablecoin settlement that can operate with institutional credibility beyond the traditional settlement window.
And that is a clear sign that the large banks are now taking stablecoin settlement seriously.
In that context, Integral showcased PrimeOne at DAS in London earlier this week. The industry is moving towards a world in which trading, pricing, collateral, and settlement must operate across a much broader time horizon than the traditional market day and with greater efficiency than the traditional settlement systems.
Tuesday - Are You Funded? Is He Funded?....
Watching the intrepid reporter David Kimberley of TradeInformer’s coverage of the Prop Trading Expo which recently took place in London, it is clear that the prop trading customer and approach to gaining business are completely different from those of traditional trading.
David’s coverage featured short videos in which he approached attendees and asked them if they were funded or not funded, and to guess whether other attendees were funded or unfunded. This emphasized the informal, community-driven and competition-based nature of prop trading as a complete contrast to traditional forms of retail trading.
At conferences where brokerages exhibit and wish to attract Introducing Brokers or affiliate partners, they do not present in this fashion at all. Instead, they take a far more legacy approach, which is all about P&L, how many leads an affiliate can bring to the broker, and revenue-share deals.
Panel discussions at these events are very carefully controlled and vetted, with no controversial discussions or difficult questions. The firms that dominate them tend to offer the same generic platforms which date back many years, do not offer flexibility of user experience and are a zero-sum battle between broker and trader.
Prop traders are not like that. Brokers need to be very specific and offer different platforms and intuitive user experiences to bring them on board and offer a prop division.
Wednesday - How will you handle prediction markets?
The ‘will-it/won’t-it’ nature of prediction markets, and the speculation within the electronic trading industry as to whether they will have much of a future due to regulatory finger-pointing or become a huge new sector, is now likely to be even more of an interesting point.
In the United States, members of the public have a long history of betting on the outcomes of political events, global current affairs or even weather – often without considering themselves to be traders. The old CME contracts of the 1990s are an early example. Now, River Markets, a prediction markets firm, has been licensed as a Futures Commission Merchant by the CFTC.
It is well known that North American financial markets regulators are extremely tough, so a prediction markets firm obtaining a licence at this nascent stage is a really interesting development.
If this goes big and regulators begin to accept it on a larger scale, how will your brokerage compete in terms of user experience and client engagement?
Around a year ago, Integral senior executive Vikas Srivistavas explained during a panel discussion at the Integral event in Sydney Australia that prediction markets are highly interesting and offer people the chance of having a bet on something tangible and interesting.
For brokers, that presents a challenge. The traditional proposition of platforms, charts, execution and market access may not be enough if clients increasingly expect intuitive, event-driven interfaces and a more engaging experience.
Thursday - What Deutsche Bank’s crypto move means for your broker
Another institutional move towards crypto caught my attention today. Deutsche Bank has rolled out crypto custody for paying clients, not simply acknowledging an alternative to banking, but bringing it into the bank’s operations.
Its September announcement set out support for Bitcoin, Ether, USDC, EURC and EURAU, with tokenised financial instruments to follow. Custody and transfers first; the broader proposition later.
For brokerages, this means spot crypto is now a mainstream product. In order to offer it to clients properly, spot crypto requires dedicated infrastructure. For example, Integral Digital provides spot crypto technology for brokers from a company already supplying trading SaaS infrastructure to banks.
The banks are now institutionalizing digital assets and brokers should be asking whether their technology can provide what today’s clients want, and not just CFDs based on crypto.
Friday
Having a chat with some digital-asset enthusiasts on a dedicated forum this week, the subject of stablecoins came up.
We discussed how stablecoins allow liquidity to move within minutes rather than days, while avoiding many of the costs created by multi-stage correspondent-banking chains, which seems to be a common understanding now.
When used, people making the transactions often do not even realise that stablecoin infrastructure underpins the transaction. They see pesos converted into euros, or euros into Kenyan shillings. But the infrastructure layer delivers near-instant foreign-exchange conversion at a reduced cost.
People are beginning to resent the hegemony of intermediary banks and traditional institutions, which take an age to settle and charge like a wounded rhino.
We did however discuss another matter, transparency.
When you settle a trade using existing settlement methods, or make a payment, no bank tells you where the trade is being routed or where the funds are being sent. But those handling it will take their commissions and take their time to settle it.
During this conversation, one trader said: “Anyone can look up how assets move between addresses over time, even if attributing those addresses to real-world actors remains hard. The payment system itself is no longer opaque; it is arguably a glass box.”
That is another advantage of stablecoin-settled prime brokerage.The traditional system asks the client to trust an invisible chain of intermediaries. The stablecoin model makes the movement of assets visible, even if the identities behind the addresses remain difficult to establish.
That is not a small difference. It changes the relationship between the client, the intermediary and the transaction itself.
