Crypto & Traditional Derivatives Exchanges
In recent conversations, I have noticed a shrinking gap between how trade desks approach crypto exchanges versus futures exchanges. This is a general statement but it makes me think about what’s to come.
Here are some sentiments from conversations I have recently had, with permissions granted.
The list of heavy hitters in cryptos vs traditional is probably slowly becoming the same set of firms. Traditional trade desks are moving into the crypto space. There are also shops that first had success in crypto and are now moving into traditional derivatives.
What happens when the newer platforms start to securitize old-school assets via tokenization or other? Will the efficiencies offered in the new spaces attract volume when they offer derivatives with traditional underlyings? This has already begun.
Securitization in the traditional space is being influenced by new innovations. What blockchain related ideas may be adopted by traditional exchanges? Are we going to see on chain transaction validation for major exchanges or clearing firms?
What barriers to entry are eliminated by perp future contracts’ small notional values?
Several prospects and clients of Pallino are asking for our input as they begin thinking about all these possibilities. We do not know the future, but the optionality built into the merging of ideas (and common ‘underlyings’) may spawn new liquidity pools, new trade opportunities, and new competition for the legacy exchanges.
Pallino: On Target
