Cryptocurrency exchange giant OKX has started providing derivatives trading without the counterparty risk of holding assets on an exchange, building on an existing partnership with asset manager CoinShares and custody joint venture Komainu.
Since the collapse of FTX, various crypto industry players have created ways to allow users to trade and settle off-exchange, from the security of a trusted custody setup.
Lewis Fellas, head of hedge fund solutions at CoinShares, stated that off-exchange settlement is relatively simple for spot markets. He emphasized that a key distinction lies in offering a similar mechanism for derivatives trading.
Fellas noted that the firm integrated a collateral mirroring agreement to facilitate trading the entire range of OKX products on the derivatives platform. This process, he said, is significantly more complex due to the involvement of margin financing and the need to implement risk mitigation strategies, such as addressing collateral calls when a client’s position deteriorates significantly.
The main Coinshares entity and several other hedge funds, whose names Fellas did not reveal, will use Komainu custody-based derivatives trading. The settlement system will also be available on other exchanges in the future, Fellas said.
Komainu is a joint venture between Japanese bank Nomura, CoinShares, and crypto storage firm Ledger. OKX started working with the firm in June of this year.
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- Source: https://www.cryptocompare.com/email-updates/daily/2023/nov/16/
