The world’s largest interdealer broker, TP ICAP (TCAPI.L), is partnering with Fidelity Investments and Standard Chartered’s digital assets custody business to establish a cryptocurrency trading platform.
The platform, which is set to open in the second half of the year, will first allow institutional investors to trade bitcoin, with the second-largest cryptocurrency ether to be included subsequently.
TP ICAP, together with Fidelity Digital Assets and Zodia Custody, which were established in December by Standard Chartered’s (STAN.L) venture capital arm and Northern Trust, aims to make crypto trading comparable to those of traditional assets such as equities, bonds, and foreign currency.
“Client demand to trade spot crypto assets is significant and growing, with interest coming from our traditional customer base across the different asset classes we operate in. But to date many of our clients have been prevented from accessing crypto asset markets due to current limitations in market infrastructure, with most execution venues requiring pre-funding and also acting as custodian”, Simon Forster, TP ICAP’s co-head of digital assets opinioned.
“This poses challenges from a conflict-of-interest perspective and results in fragmented liquidity. Our partnership, and resultant new platform, is a natural evolution in market structure that will make digital assets, such as Bitcoin, more accessible for the wholesale market”, he asserted.
According to the consortium, the platform would include post-trade infrastructure with a network of digital asset custodians, as well as independent execution and settlement.
Currently, crypto execution and custody services are generally combined in a single location, which increases credit risks. Flow Traders, located in Amsterdam, will offer liquidity to the platform. TP ICAP has expanded its worldwide capital markets presence by launching new data and analytics services as well as new products.
Specialized crypto funds have experienced record inflows this year, but big banks that provide access must combine growing demand with the long-standing compliance issues that have plagued the cryptocurrency sector, as well as increased regulatory scrutiny.
Nonetheless, the change is the latest affirmation of the sector by Standard Chartered, whose venture capital department announced earlier this month that it will make a different crypto brokerage and exchange platform in the United Kingdom and Europe in collaboration with Hong Kong’s BC Technology Group. ICAP made its initial step into digital assets in 2019 by allowing customers to trade crypto asset futures products, but the new platform “significantly expands” the business’s reach in this fast-growing industry, according to the company.
The platform is pending clearance from the Financial Conduct Authority of the United Kingdom. According to TP ICAP, neither Standard Chartered nor Fidelity Investments have invested in the platform.
“With this new infrastructure, we’re addressing one of the frictions in the investor experience that’s unique to this nascent asset class. Now, investors can more confidently execute trades knowing their assets remain still and secure in our custody,” said Chris Tyrer, head of Fidelity Digital Assets in Europe.