SIX Digital Exchange (SDX) and Swiss spot trading and settlement venue Rulematch have partnered to offer institutions an integrated solution for the trading, settlement, and management of crypto assets. In a press release, SDX states that the institutional-grade solution is “centred around efficiency, security, and compliance” and “signals the coming of age of the crypto market”.
Institutions will now be able to “trade on Rulematch’s platform with post-trade clearing and settlement, eliminating the need to pre-finance their trading activities”, reveals SDX in its statement. Crypto assets will be held in SDX’s secure custody, and clearing collateral can be managed on a dedicated SDX account. “The integration removes the need to hold collateral with the trading venue, providing a seamless and secure solution”. Additionally, “investors will also be able to increase their crypto collateral positions within seconds, avoiding the lengthy delays often associated with traditional on-chain transactions”.
Removing barriers
SDX head David Newns says that the partnership provides a “clear separation of trading and custody roles” so that institutional investors can “retain full control over their collateral via SDX’s custody and can segregate assets by crypto address, ensuring clarity on asset location at all times”.
In a report by Markets Media, Newns cites the requirement for pre-funding crypto trading as one of the constraints on the asset class’ volumes and activity. “Solving this is really important for wholesale adoption and for the integration of this asset class into the institutional ecosystem.”
Likewise, David Riegelnig, CEO of Rulematch tells Markets Media that “the requirement to pre-fund was a barrier to institutions entering crypto”. The partnership with SDX “allows institutions to manage collateral dynamically and very easily, and post-trade settlement makes it capital efficient, including multilateral netting”.
Crypto trades have to be pre-funded because clearinghouses are not yet common in the crypto space. Riegelnig observes, however, that many participants would ideally still “want to work with a custodian, which will be provided by the SDX partnership”.
