Mark Weaden
Goldman Sachs, one of the biggest investment banks in the United States is apparently trying to onboard various derivatives products from US-based cryptocurrency firm FTX. The firm has been requesting help from FTX over the regulatory and public listing, with the aim to expand its crypto derivatives.
The hope is to leverage some of its derivatives tools and services internally to carry out automatic trades. However, U.S. Commodity Futures Trading Commission (CFTC) has sought public comments on the requested amendment from the FTX exchange. The request came after the chief regulatory body reviewed FTX’s proposal, believing that it deserves criticism as it could lead to a monopoly for Goldman Sachs.
What Was Said?
The issue is if Goldman does FTX.US brokerage services, it will handle the collateral and margin requirements internally, rather than depending on “futures commission merchants” (FCMs), as stated by FTX.US president Brett Harrison. He went on to state that “We have multiple FCMs already committed to integrating technologically with the exchange. There are several large ones you can probably name.”
FTX’s CEO Sam Bankman-Fried has become a voice for the industry, someone who runs a highly-reputable company and one of the biggest exchanges in the States. He believes that integrating a brokerage model would help to bring stability and freedom to the crypto market, which is especially poignant, given the recent market history.
In a recent roundtable discussion with the CFTC, Bankman-Fried presented various questions about crypto derivatives and FTX’s proposal to integrate its own futures commission merchants.
Criticisms Of Derivatives Trading
The high volatility of the crypto market makes it particularly risky for derivatives investments. Coupled with the growing popularity of investing in crypto, it’s no surprise that it’s been under scrutiny for some time.
Many European and U.S. authorities have prohibited the use of crypto exchanges offering leverage trading. In fact, global giant Binance had to shut down its derivatives offering in Several European nations, including shutting down together in the UK.
Either way, FTX has a clear vision for derivatives trading and they seem convinced an integrated broker model would help to stabilise the market and the industry at large. Bankman-Fried may be young but has proven to be right on a number of issues over the years, which is a testament to his success.
