Unlocking the Multi-Trillion Dollar Digital Asset Derivatives Market for Institutions

  • The institutional preference for derivatives over spot instruments.
  • The complexity of trading, as an institution, in a fragmented digital asset derivatives market.
  • How Kemet Trading is changing the landscape of digital asset derivative trading for institutions.

The Institutional Preference for Derivatives

  • Leverage: The ability to leverage positions is fundamentally enticing for higher “CAGR”; leverage allows for a substantially higher alpha overall.
  • Reduced Operational Risk: Derivatives allow institutions to gain synthetic exposure without the need for custody of any underlying asset. Custody is a friction-heavy process.
  • Efficient Hedging: Derivatives are prime instruments to help mitigate various financial risk exposures that they may be exposed to. Every major institution utilizes derivatives in some form or another for hedging against markets.
  • Deep Liquidity: Almost every digital asset derivative is cash settled. This drives a more capital efficient market-making operation; translating to deeper liquidity across the market.

Trading Digital Asset Derivatives: A Complex Landscape

Source: Kemet Trading Research
  • Multiple traders executing hundreds of trades a day using various instruments across multiple liquidity venues, means that there is no central trade blotter, which risks desk performance and results in an increased margin of error throughout trading sessions.
  • Fragmented liquidity venues make desk management and the trade lifecycle overly complex.
  • Fund admins struggle to onboard multiple liquidity venues and track the desk’s outstanding positions.
  • Risk managers lack necessary tooling to track real time positions, greeks and leverage ratios.
  • Auditors deal with multiple exchanges, both domestic and global, in an unclear regulatory environment. This makes compliance difficult.
  • DeFi trading is complicated. Running a DeFi trading desk across multiple supporting functions is even more complicated.

How Kemet Trading is changing the landscape of digital asset derivative trading for institutions

  • Access the best liquidity venues across CeFi and DeFi.
  • Utilize our state-of-the-art algorithms for best order execution.
  • Enable standardized pre- and post-trade work flows.
  • Allow cross-functional collaboration within the trading desk.
  • Track every portfolio with real-time P&L, aggregate deltas and manage position risk.
  • By width, we see the instrument offerings extending as the market continues to grow. This means a wider array of Leverage Tokens, specialized multi-asset packaged derivatives, more synthetic traditional assets like oil and benchmark market indices.
  • By depth, we see the development of adequate institutional-grade infrastructure necessary for increased adoption, which ultimately translates to growth across the market. Allowing institutions to run their desks using a single platform is a fundamental shift in what is currently possible.

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Institutional-grade infrastructure for digital asset derivatives trading; optimizing access to liquidity, data, trade execution and post-trade workflows.

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Kemet Trading

Institutional-grade infrastructure for digital asset derivatives trading; optimizing access to liquidity, data, trade execution and post-trade workflows.