New Crypto Exchange Launches with Market Maker Backing
Posted by Colin Lambert. Last updated: September 14, 2022
A group of broker-dealers, market makers and venture capitalists have come together to launch what they claim is a “first-of-its-kind” exchange to trade digital assets.
EDX Markets has been formed by Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital and Virtu Financial, however the group say they expect additional market participants to partner with them in due course. The new exchange says it will combine technology provided by MEMX with best practices from traditional financial markets. It also predicts tighter spreads thanks to “greater liquidity, to support secure, fast and efficient cryptocurrency trading for US retail and institutional investors”.
The “innovative” approach seems to be a familiar path for the FX market – aggregation. EDXM says it will aggregate liquidity from multiple market makers, and back this up with a network of select digital custodians to safeguard assets. Trades will be netted and settled on the blockchain “for greater speed and efficiency at lower cost”, eliminating the need for “expensive” bilateral settlement.
It adds that customer security and regulatory compliance are also core foundational principles for EDXM. In particular, it will remove significant conflicts of interest that affect existing cryptocurrency exchanges by separating responsibility for operating the exchange from the entities trading on it.
The exchange has unveiled a roster of senior staffers from its founders. Jamil Nazarali, formerly global head of business development at Citadel Securities, serves as the CEO of EDXM; Tony Acuña-Rohter, who previously served as chief technology officer at ErisX, through its acquisition by Cboe Global Markets, has joined as CTO; and David Forman, formerly chief legal officer at Fidelity Brokerage Services and general counsel for Fidelity Digital Assets, is general counsel.
EDXM says these three will be joined by additional hires from across the cryptocurrency and traditional financial services sectors. Representatives from the founding member firms will comprise EDXM’s board of directors.
“It is a privilege to lead EDXM as we build this exciting new trading ecosystem, and I am grateful for the participation, support and guidance of our consortium members,” says Nazarali. “We look forward to welcoming additional participants to the exchange, which will drive ongoing trading in this important asset class while creating a virtuous cycle of continually enhanced liquidity and efficiency supported by MEMX’s cutting-edge technology.”
EDXM’s board of directors add in a statement, “Crypto is a $1 trillion global asset class with over 300 million participants and pent-up demand from millions more. Unlocking this demand requires a platform that can meet the needs of both retail traders and institutional investors with high compliance and security standards. With MEMX-supported digital infrastructure that eliminates technological and organisational bottlenecks, EDXM will be a safe entry point to crypto and serve as the exchange of choice for trading digital assets on a platform designed for and used by leading financial institutions.”