TP Icap, the world’s biggest interdealer broker, is to launch a cryptocurrency trading platform in partnership with Standard Chartered’s digital assets custody unit Zodia Custody and Fidelity Investments’ Fidelity Digital Assets. The platform aims to provide institutional investors, banks and hedge funds with a facility to trade cryptocurrencies in much the same way as they trade traditional assets like commodities, stocks, bonds and forex.
Zodia Custody was launched last December by Standard Chartered’s venture capital division and Northern Trust and will underpin the platform as custodian. London-based TP Icap is a middleman for derivatives, commodities and bond trades and is a member of the FTSE 250. The £1.6 billion interdealer broker employs 5500 staff across 26 countries, including around 2000 in the UK.
The cryptocurrency trading platform, which hopes to gain regulatory permission from the FCA to begin operations before the end of this year, will offer post-trade infrastructure through a network of specialised digital asset custodians. The consortium will also provide separated execution and settlement, seen as crucial to attracting larger investors with a lower risk profile than typical cryptocurrency traders.
More banks would like to offer their investors access to cryptocurrencies exposure, having noted record inflows into dedicated funds this year. But they have to do so while sticking to strict compliance rules with regulators watching carefully.
Both Fidelity Investments and Standard Chartered will contribute trading infrastructure services rather than invest in the platform financially, say TP Icap, whose share price gained 1% yesterday on the news. Duncan Trenholme, the broker’s co-head of digital assets, commented:
“Investor interest in this new asset class has exploded dramatically in the last six to eight months. In most of our conversations with clients, they want a separation of custodial roles from execution capabilities, which is opposite to the models that exist currently.”
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