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Financial Derivatives

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MULTI ASSET PLATFORM SOLUTION You may have seen in recent weeks that I have posted about launching a Multi Asset Trading Platform with a trusted and proven technology partner. I was speaking to a friend in the industry on Monday evening over a beer and mentioned this. His immediate response was 'Does it really do true Multi Asset? It is not a daft question at all, as everyone states that they provide Multi Asset Trading but the reality is that they offer Spot FX, CFDs and Commodities, just like everyone else! So for the record, if you are looking to consolidate your platforms so your clients can trade on a single platform, or you are looking to offer the likes of Cash Equities, Futures and Options to your existing FX and CFDs then please get in touch. True Multi Asset trading is just a phone call away.

The services usually offered from crypto prime brokers (PBs) are similar to traditional finance, but have their own “crypto flare”. 1. Direct Market Access (DMA): The PB provides direct access to an exchange. The PB owns the “master” relationship with the exchange, and gives a sub account to a trading client. 2. Agency Trading: The trading client (fund) directs a trade through the PB and the PB executes it on behalf of the client. 3. OTC trading, derivatives, and RFQ (Request for Quote): A lot of PBs either have their own Over the Counter (OTC) desk, or partner with OTC desks. OTC desks will be used for large transactions (usually in spot markets), where the OTC desk will often provide a price for the trade (if a price is quoted then this is RFQ). The OTC desks can also write bespoke derivatives that are more exotic than vanilla puts/calls, and on tokens not listed on public options exchanges. 4. Lending: PBs will extend loans to clients who meet lending requirements. These loans are mostly made to HFT and arbitrage traders currently. 5. Custody: PBs will provide custody to clients. Usually this is using a multi-party computation provider.

Interesting thoughts on sourcing derivatives from the US inbound tax standpoint.

Post 5: There are various banks that act as dealers and prime brokers in the hedge fund industry in the OTC world. If I want to divide into two, there are large global banks and smaller regional banks. Big Global Banks act as dealers for many derivatives trades across various asset classes, such as interest rates, foreign exchange, and many more. They provide most of the market’s liquidity and ensure their portfolios are well collateralized to manage risk. Smaller regional banks typically trade in fewer products, often focusing on simpler "plain vanilla" trades and a limited number of asset classes. Collateralization, which we are all aware of for exchange trade markets, similarly works in OTC markets. The form of collateralization in OTC markets depends on the creditworthiness of the parties involved, whether it's bilateral, unilateral, or handled through an exchange. There is a CSA signed for the same if it's non-cleared OTC trades. While collateralization helps reduce credit risk, it introduces other risks, such as operational risk from the process of exchanging collateral regularly. There is a legal risk if the other party refuses to pay or defaults, which may have been agreed as per the Credit Support Annex (CSA). There is also a liquidity risk if a party lacks sufficient collateral when they are in a loss position. Post-2008 crises, many OTC products, especially interest rate swaps (IRS) and credit default swaps (CDS), have moved to central clearing. This has reduced the overall risk in the OTC market, but there are more products apart from these that get traded, which gets mitigated via collateralization. Thanks for the reading and for support always There are previous post you can check in comment sections To be continued! If you found this knowledgeable, do check and follow my hashtag #mustufapetiwala I use for all my posts, Do follow me at Mustufa Petiwala and like , comment and share ahead #derivatives #finance #markets

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Securities lending and repo trades can be interchangeable based on pricing, legal agreements, or cost-effective delivery methods. Ed Tyndale-Biscoe, Head of Secured Funding Product Development at ION Markets, recently spoke to Finadium about the role of trading technology in the age of electronification and optimization, and the factors driving their convergence or separation. He discussed how at ION Markets, repo and securities lending workflows are implemented to support both business lines throughout the trade lifecycle in a single application. He also explained why he doesn’t expect full integration of these desks overnight. Read here: https://lnkd.in/eX6mpRr5

A good read on our repo trading platform at SIX Securities Services. Take a look!

One trader's liquidation is another's opportunity. Embrace the market's liquidity. Set your parameters and know where to execute. Key levels will pay off. Whether you're long or short, execute with full confidence.