Copper adds collateral management segment to OTC derivatives services
07 August 2020 London
Image: SFIO CRACHO/Shutterstock.com
Copper, the London-based digital asset infrastructure provider, has expanded its ClearLoop digital asset trading framework to include collateral management for crypto derivatives.
ClearLoop, launched earlier this year, is a tool designed for investors to settle crypto trades off-exchange easily. It aims to reduce post-trade withdrawal time and eliminates delays by enabling off-exchange settlement.
It is also expected to allow traders to react faster and execute higher volumes per transaction.
Copper says that the ClearLoop API has already been deployed into crypto exchanges including Deribit, AAX, Bitfinex, CoinPass, Deversifi and Xena.
This new expansion of ClearLoop will enable crypto derivatives to be traded over-the-counter (OTC) with significantly reduced risk for all parties involved, opening up the marketplace to a wide range of new market participants, according to Copper.
GSR, a digital asset trading firm and a Copper client, served as a key advisor in the development of the new collateral management system.
With this new functionality, Copper acts as an independent third-party for collateral management and settlement.
When traded OTC, derivatives can create a number of risks for counterparties, including credit risk exposure and challenges in managing collateral, as the derivatives have not been traded through an exchange.
ClearLoop significantly reduces these risks by allowing parties to post collateral on the contract within Copper’s independent, highly secure MPC custody.
This, Copper says, provides the client with absolute transparency and peace of mind that their collateral is being safeguarded by a third-party custodian rather than taking direct credit risk.
Jakob Palmstierna, head of investment solutions at GSR, a Copper client, says: “OTC derivatives are often cited as the preferred choice for more traditional investors, corporate entities can now trade products that are specifically built for them without the collateral leaving the custodian.
“This is a powerful way to reduce exchange and operational risk, giving institutions peace of mind.”
Copper CEO Dmitry Tokarev adds that after fully developing the management framework, both GSR and Copper are seeing “great potential for further growth in the derivatives market”.
ClearLoop, launched earlier this year, is a tool designed for investors to settle crypto trades off-exchange easily. It aims to reduce post-trade withdrawal time and eliminates delays by enabling off-exchange settlement.
It is also expected to allow traders to react faster and execute higher volumes per transaction.
Copper says that the ClearLoop API has already been deployed into crypto exchanges including Deribit, AAX, Bitfinex, CoinPass, Deversifi and Xena.
This new expansion of ClearLoop will enable crypto derivatives to be traded over-the-counter (OTC) with significantly reduced risk for all parties involved, opening up the marketplace to a wide range of new market participants, according to Copper.
GSR, a digital asset trading firm and a Copper client, served as a key advisor in the development of the new collateral management system.
With this new functionality, Copper acts as an independent third-party for collateral management and settlement.
When traded OTC, derivatives can create a number of risks for counterparties, including credit risk exposure and challenges in managing collateral, as the derivatives have not been traded through an exchange.
ClearLoop significantly reduces these risks by allowing parties to post collateral on the contract within Copper’s independent, highly secure MPC custody.
This, Copper says, provides the client with absolute transparency and peace of mind that their collateral is being safeguarded by a third-party custodian rather than taking direct credit risk.
Jakob Palmstierna, head of investment solutions at GSR, a Copper client, says: “OTC derivatives are often cited as the preferred choice for more traditional investors, corporate entities can now trade products that are specifically built for them without the collateral leaving the custodian.
“This is a powerful way to reduce exchange and operational risk, giving institutions peace of mind.”
Copper CEO Dmitry Tokarev adds that after fully developing the management framework, both GSR and Copper are seeing “great potential for further growth in the derivatives market”.
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