Managing Director Of LMAX Digital On Rising Institutional Interest In Crypto

On Wednesday, March 30, Jenna Wright, Managing Director of LMAX Digital, was interviewed by James Harris, Chief Commercial Officer of leading digital asset market data provider CryptoCompare, at this year’s CryptoCompare Digital Asset Summit.

LMAX Group is “a global financial technology company and the leading independent operator of several institutional execution venues for currency and cryptocurrency trading”. With offices in 9 countries and a global customer base, the Group builds and operates its own high performance, ultra-low latency exchange infrastructure, which includes matching engines in London, New York and Tokyo. The LMAX Group business portfolio includes LMAX Exchange, LMAX Global and LMAX Digital.

LMAX Digital, which is “regulated by the Gibraltar Financial Services Commission (GFSC) as a DLT provider for execution and custody services”, is an institutional cryptocurrency exchange operated by the LMAX Group. Using the LMAX Group’s “proven and robust technology and liquidity relationships”, LMAX Digital “provides a market-leading solution for physical trading and custody services for the most liquid cryptocurrencies – such as BTC ( Bitcoin), ETH (Ethereum), LTC (Litecoin), BCH (Bitcoin Cash), XRP (Ripple) and SOL (Solana). »

When asked for general information about the LMAX group, Wright said:

The LMAX Group has been operating foreign exchanges around the world in London, New York and Tokyo since 2010. So we have been in the capital markets for quite some time now and we trade around $25 billion a day in foreign exchange. And in 2017, we had a group of existing non-bank institutional type clients asking if we could review this crypto coin.

So they were trading on a ton of retail crypto exchanges, but there really wasn’t really anywhere that they would consider institutional grade, where they could offset some of their risk, maybe reduce the risk, and really connect with other like-minded participants. So could we take what we were doing in forex and replicate it in the crypto world? So when we looked at it, actually for us the bitcoin dollar was very similar to the euro dollar, right?

It didn’t take much longer than that. It was basically the same software, just new hardware. So, it was only a fifth exchange, very commonplace for us, considering that we had done it four times before. And we thought we’d give it a try. What took a bit longer was the custody concept. We had relied heavily on the banks to do that for us in the past, on the fiduciary side and then on the regulatory side.

So we were heavily regulated across the world for anything FX, and we wanted to replicate that on the crypto side. So on the custody side, it was definitely a hot portfolio situation in 2017 and given that we were looking – similarly to how we do for FX – to target only institutional type clients, portfolios warm were not going to work for us. It would contain tens and hundreds of millions, maybe billions, very early on, so we decided to build it in-house. We’re a tech company at heart and we’ve built an exclusive repository. So we now run both. We operate exchanges and institutional cryptocurrencies as well as the custodian.

Regarding their plans for this year, Wright mentioned the upcoming launch of their crypto futures product. As you may know, on March 17, the LMAX Group announced via a press release that it had partnered with SIX Swiss Exchange to launch “cash-settled crypto-asset futures contracts cleared by centralized manner. This launch is scheduled for Q3 2022, subject to regulatory approval, and “will initially include USD-settled Bitcoin and Ethereum futures contracts, trading 23 hours a day, five days a week, with full product rollout to be extended to 24/7 trading. .”

One of the most interesting parts of the interview was when Harris asked Wright how her clients are dealing with the current macro environment and specifically if she has noticed a change in their level of interest in crypto.

Wright replied:

2022 looks a bit like the year of consolidations. So far very different from how our last year has gone in terms of training activity – which was almost sustainable, a bit wild, in the first half of last year…I think we briefly talked. If we go back to 2018, when we pitched our crypto offering to 35 banks that trade forex with us, they kind of said “congratulations.” well done, see you later, tell us how you are”.

And then you fast forward to now, and everyone knocks on the door. They want to take you to lunch. They want to understand what is happening because they have strategies… They are enthusiastic, aren’t they?

The regulations hold them back to some extent, but there are other ways to go about it. They invest in blockchain technology companies… They may be considering being a custodian. Do they hold it? Are they investing in it? Do they trade it? Do they erase it?

Every bank has a different angle to my conversations, but the reality is that they’re engaged and taking my market data, and I couldn’t get them to do that in 2018…and now a third of those 35 take market data. So they’re getting ready… So I think we’re in the best position we’ve ever been in.

The interview with Jenna Wright, CEO of LMAX Digital, begins at 34:28 of the video above and ends at 55:40.

Warning

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading crypto-assets involves the risk of financial loss.

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Managing Director Of LMAX Digital On Rising Institutional Interest In Crypto


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