Avelacom Adds Tokyo Connection

Avelacom has announced the launch of a new point of presence in Equinix’s Tokyo (TY3) International Business Exchange data centre, providing trading firms with faster and more reliable connectivity between TY3 and Equinix’s London (LD4/5) data centre facilities. The new London – Tokyo route delivers the lowest latency in the market – 145.3 milliseconds (round-trip), the firm claims.

The new connectivity is designed to serve the needs of financial services firms, enabling them to access market data and send orders at the highest possible speed and improve overall trading performance.

“Platform Equinix is home to the world’s largest multi-asset trading venues and provides interconnection between ecosystem participants to accelerate business performance,” says Russell Poole, managing director, Equinix UK. “Avelacom’s new PoP offers increased opportunities for FX market players, as latency sensitive traders access the London-Tokyo route.”

Aleksey Larichev, Avelacom’s managing director, adds,  “The London – Tokyo route has always been associated with latency and redundancy issues because of its great distance and the multiple territories through which the data has to travel. Most market participants experience round-tip latency of around 156 milliseconds, but by switching to Avelacom’s network they can shave off more than 10 milliseconds, significantly improving data speed and overall performance.

“Connectivity is one of the key drivers for success in the electronic trading environment, and our London – Tokyo ultra-low latency offerings give companies a true competitive edge,” he adds.

Does the Crypto Price Plummet Tell the Whole Story?

“Looking for Liquidity” is taking place at The Princeton Club of New York, December 4th, 4.30-7.30pm. Open to investors and trading firms only, to RSVP email gina@profit-loss.com

At the start of 2018, the total market capitalisation of cryptocurrencies was above $828 billion, with many predicting that it would only rise further. Now, that market capitalisation is below $130 billion and continues to fall. Meanwhile, the price of bitcoin is down to $3,688, a 42% month-on-month drop and 65% year-on-year.

But does the price action of cryptos tell the whole story in this space right now? And what are the implications of this bear market on liquidity?

After all, the Intercontinental Exchange (ICE) and Nasdaq both plan to launch new crypto trading platforms next year, while Fidelity is also set to launch an asset custody service in 2019. Trading volumes on the CME and CBOE bitcoin futures have ticked up even as (because?) the market price has trended down and there are still ETF proposals sitting on US regulators’ desks that could still be approved.

Could it be that even as retail liquidity is drying up, more institutional liquidity is edging closer?

These are among the key questions that will be addressed at the upcoming OnTheBlock event, “Looking for Liquidity” taking place on December 4th at the Princeton Club of New York. This event, which is open only to investors and trading firms and is sponsored by Genesis Trading, will begin with a fireside chat featuring Daniel Gorfine, Chief Innovation Officer and Director of LabCFTC, who will provide a unique insight into how the US regulator is approaching the crypto space.

This will be followed by a panel discussion featuring crypto-experts that are active in the markets today on the evolving nature of liquidity within the crypto space and then an audience-led Q&A session:

Moderator: Galen Stops, Editor, Profit & Loss


LabCFTC Releases Smart Contracts Primer

The Commodity Futures Trading Commission’s LabCFTC has released, “A CFTC Primer on Smart Contracts”. The primer is part of LabCFTC’s effort to engage with innovators and market participants on a range of fintech topics, and follows on from a 2017 primer on virtual currencies. 

“Smart contracts are being used to drive further automation in our markets and may have an impact across a range of economic activities,” says LabCFTC director Daniel Gorfine. “This primer is focused on explaining smart contracts, exploring how they may impact our markets and highlighting potentially novel risks and challenges.”

The primer sets out to define “smart contracts”, including by exploring their history, characteristics, and potential applications that may eventually impact daily life. The primer explains early self-executing software logic evolving into current smart contract technology – for example, starting with a simple vending machine illustration and then discussing more complex examples, including credit default swap contracts. 

The primer works through a range of operational, technical, cybersecurity, fraud and manipulation, and governance risks and challenges. The primer goes on to speak to the CFTC’s role to protect market users and their funds, consumers, and the public.  

The primer looks at some of the potential use cases for smart contracts in financial market operations. Among these are derivatives, whereby LabCFTC says smart contracts could potentially streamline post-trade processes, real time valuations and margin calls. It also notes that in the realm of trade clearing and settlement, smart contracts could improve efficiency and speed of settlement with less misunderstandings of terms. Additionally, smart contracts could provide greater standardisation and accuracy of data reporting and recordkeeping (e.g., swaps data reporting, regulator nodes for real time risk analysis); as well as automated retention and destruction.

The primer also sets out the potential for such contracts to streamline trading of products subject to oversight by the CFTC (e.g., options, futures, and swaps) and enhance efficiency from pre-trade through post-trade (e.g., price discovery, execution, clearing, and settlement). Among the potential benefits noted are a reduction of duplicative confirmation; a reduction oftrade, capital, and margin risks; automated fulfillment of contracts; enhanced compliance with internal written policies and procedures and with legal obligations and regulatory requirements; as well as Improved regulatory reporting.

10 Firms Join to Create Code of Conduct for Digital Asset Markets

Ten financial services and technology firms leading developments in the digital asset and blockchain space have joined together to create the Association for Digital Asset Markets (ADAM) to establish a Code of Conduct for emerging digital asset markets.

US-based ADAM will proactively seek comprehensive standards for digital asset market participants. The group, which includes BitOoda, BTIG, Cumberland, Galaxy Digital, Genesis Global Trading, GSR, Hudson River Trading, Paxos, Symbiont and XBTO, says it will work with current and former regulators to provide rules for the efficient trading, custody, clearing and settlement of digital assets.

Future guidelines will encourage professionalism and ethical conduct by all market participants, increase transparency by providing information to regulators and the public, and deter market manipulation, the group stated.

Duncan Niederauer, former Chief Executive Officer of the New York Stock Exchange and ADAM Advisory Board Member, says, “Rules are fundamental to the development of any market. Over 200 years ago, market leaders came together to draft rules that led to the creation of the New York Stock Exchange. The advent of digital assets requires a similar effort; one that will clarify existing rules and give both investors and regulators the confidence necessary to sustain this market. I applaud the firms leading the ADAM initiative and look forward to advising them on standards that will enable this market to thrive.”

ADAM’s Code of Conduct will include guidelines for market integrity, risk management, KYC and AML, custody, record keeping, clearing and settlement, market manipulation, data protection, and research, among other topics.

ADAM plans to add new members and will announce its officers in the coming months. It will maintain offices in New York and Washington, DC. Participating organisations include trading venues, custodians, investors, asset managers, traders, liquidity providers and brokers.

Crypto and FX: More Alike than We Think?

FX industry veteran and Profit & Loss 2012 Hall of Fame inductee, David Ogg, reflected in a recent video interview on how the rapidly evolving crypto markets resemble the FX markets of the past.

“It’s like FX in the 1980s,” said Ogg, who is currently the head of FX and trading venues at OTCXN, before adding,“The front-end technology is pretty primitive.”

By contrast, he said that OTCXN has developed “cutting edge” technology in terms of how it displays liquidity, offering visual tickers that enable traders to get a visual representation of what is happening in the market with just a glance.

Ogg also noted that the speed of trading continues to be slow in the crypto space, while there are significant challenges regarding settlement that OTCXN has sought to address.

“A lot of technology has been retail focused, so some of it’s slow, the whole process needs to be ramped up. FX trading took off with prime broking, it allowed the buy side to come in and trade heavy amounts,” said Ogg.

He added that by offering instantaneous settlement, OTXCN will enable the crypto space to accelerate in much the same way that the FX space did after the introduction of PB.

“There’s a lot of similarities,” said Ogg.

The full video interview can be watched here: 


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