Giants in the traditional field are moving more and more frequently in the blockchain field.
In January this year, the UK"Financial Times"According to reports, the London Stock Exchange Group (LSEG) London Stock Exchange Group is cooperating with the cryptocurrency exchange AAX (Atom Asset Exchange), and the trading technology of the London Stock Exchange Group will be used by the Atom Group for its new cryptocurrency exchange AAX .
AAX is expected to launch in the first half of 2019 and will use the LSE Companion system already in use on the London, Hong Kong, Singapore and Johannesburg stock exchanges. This is the first time that the London Stock Exchange has entered into a strategic partnership with a cryptocurrency exchange.
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The currency circle hopes that traditional exchanges will bring institutions into the market
Odaily recently interviewed Atom CEO Peter Lin, and two points can be concluded from his answer.
"What we are doing is a long-term thing." Peter said that he knew that he could make money by cutting a wave of leeks, but he didn't want to make this kind of money. He was preparing to establish the Atom Group in early 2018. "At that time, Bitcoin and various altcoins were financing crazily. We felt that the bubble would definitely burst, and we only knew who was swimming naked when the tide ebbed."
During the conversation, Peter specifically mentioned Binance. He attributed the success of Binance to its early layout and focus on technology, so when the opportunity comes, he can "hold it", There are very few downtimes, freezes, etc. "Changpeng Zhao started working on exchange technology in 2015." (Odaily Note: But some people say that the IEO has been showing that it is loading, and has not grabbed shares...)
AAX also wants to be ready to meet the incremental market, namely traditional institutional investors.
"At that time, I felt that the correct development trend of the blockchain should be combined with the traditional market, and it should be more compliant. We hope to transform with the traditional market. We saw the New York Stock Exchange and Nasdaq at the end of 2018. They are all in, thinking that traditional investors will come in.”
Peter believes that the biggest pain point in the currency circle is funds (volume) and compliance, "exchanges must carry the banner of compliance." If there is a bull market in cryptocurrency in the future (needing capital influx), it will not only be brought by the original retail investors, but also by professional traditional investors.
This is why traditional stock exchanges have been involved in digital currencies before, and they have always attracted much attention.
So far, the world's three largest exchangespublicly involvedThe field of cryptocurrency exchanges. Previously in the second half of 2018, NasdaqPowering the cryptocurrency exchange DX.change，Nasdaq announced at the end of 2018 that it had invested in digital currency exchange ErisX with Fidelity; August 2018,NYSE parent Intercontinental Exchange (ICE) launches cryptocurrency futures exchange Bakkt, Li Ka-shing's Victoria Harbor Investment, Starbucks, etc., all hold shares in Bakkt.
There is a view that traditional exchanges have deep resources and many customers. Once a digital currency exchange with its support goes online, it will attract a large amount of traditional financial capital to enter the market and bring a wave of bull market.
On the other hand, traditional exchanges and financial institutions themselves also need to have new technologies, but the premise for them to enter the market is compliance, so they need to gradually bring the norms to the digital currency field and promote this field to comply with regulations.
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Cryptocurrency exchanges cannot meet the requirements of traditional investors
After the establishment of Atom, the first product was chosen as an exchange, "I feel that this business model is relatively mature and can form a brand appeal." The users targeted by this exchange are traditional investors.
Peter believes that the core competitiveness of exchanges is throughput and latency.
Traditional investors with large amounts of funds will pay more attention to this.
Insufficient delay and system capacity may cause loss of user funds. For example, futures, for both users and the platform, positions need to be closed. If the carrying capacity of the platform is not enough, users will often fail to place orders during peak business hours; in order to avoid this risk, users can only choose to close out in advance, otherwise, positions will be overwhelmed.
"Traditional exchanges are a very large thing, and the engine is also a big part. Capacity, delay, and stability are all very important." Peter also said that the R&D team of the London Exchange has 600 people, and there are almost no coins. Circle exchanges can reach this level. "So we found Michael and started working with the LSE in mid-2018."
The Michael Wong he mentioned is the technical VP of AAX. He has developed financial industry solutions in the IBM blockchain, participated in the project of the London Stock Exchange Group, and helped the London Stock Exchange improve its performance. "The technology provider for most of the top stock exchanges in the world is the London Stock Exchange or Nasdaq."
"At first I wanted to do it myself, but I found that it would take many years to achieve our requirements at the institutional level." The London Stock Exchange, which Atom finally cooperated with, can promise: high concurrency (1 million per second), Low latency (0.0001 per order), high stability (99.999%). "Such a platform can carry the trading volume of the world's largest traditional financial market, which is enough to meet the requirements of institutional users for a mature trading market."
In addition to performance, London Exchange can also provide system rules that meet local regulations. "How to formulate specific rules for exchange matching involves compliance. We understand that some traditional institutions are very interested in investing in virtual currency, but in the end they all gave up because there is no compliant trading venue. AAX adopts the LSE's Compliant technology and operation methods, hoping to pave the way for institutional users to enter the market."
The Atom team currently has 60 people mainly technicians, and the post-trade systems such as wallets and clearing and settlement systems are all self-developed. The main part of the cooperation with the London Stock Exchange is the matching engine part. Since the original engine is mainly aimed at the stock market and does not run 24 hours like the currency market, the two parties cooperated to optimize it.
London Stock Exchange is considered their strategic partner and will help AAX in terms of operations, compliance experience, and customer acquisition. AAX revealed that although the platform has not yet been released, it has signed some institutional clients, and some are in internal testing.
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Traditional investors still need other prerequisites to enter the market
The London Stock Exchange has undoubtedly brought brand endorsement to AAX, but it does not mean absolute success.
Mike Novogratz
Galaxy Digital CEO Mike NovogratzIt means that credible custody services are the prerequisite for institutional investors and commodity traders to enter the market. He believes that whether the bull market can come depends on the custody services of digital assets, such as wallet services and key storage solutions.
Former JPMorgan Chief Equity Strategist, Head of Research at Fundstrat Global AdvisorThomas LeeIt is believed that once the Bitcoin ETF is licensed, the expected influx of a large amount of legal currency capital into the market will not only respond quickly to its price, but also create a positive impression on Bitcoin's reputation.
Just recently, however, the highly anticipated Bitcoin ETF took another hit. Of the seven responses received by the SEC (US Securities Regulatory Commission), six rejected the Bitcoin ETF, arguing that Bitcoin has excessive volatility and market manipulation issues. The discussion on whether to apply a Bitcoin ETF may have been delayed until the fourth quarter of 2019.
expressexpressWill be postponing again. As a futures exchange, Bakkt has been waiting for the U.S. Commodity Futures Trading Commission (CFTC) to approve its bitcoin futures contract product.Physical delivery + no leverage trading Yesits uniqueness.
Moreover, if the blockchain itself does not support its token value on a large scale, even if traditional investors enter the market, only Bitcoin can be pulled.
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I am Lu Xiaoming, editor of Odaily. I am exploring the real blockchain. Please add lohiuming for breaking news and communication. Please note your name, unit, position and reason.
