Key Takeaways
- • SFOX, a digital asset prime broker, unveiled what it describes as the first cryptocurrency trading product built specifically for hedge funds and asset managers, offering capabilities previously limited to the market's largest firms.
- • The platform integrates more than 18 customizable order types and execution algorithms, Trade Cost Analysis (TCA) at no additional cost, flexible settlement including Post Trade Settlement on a line of credit, multi-user accounts, and integrated reporting and tax tools.
- • SFOX says hedge funds are its fastest-growing trading segment, with 18x year-over-year growth in trading volume and a 10x increase in average volume per customer over the past year.
- • Per KPMG's "Pulse of Fintech" report, global investment in blockchain and crypto reached $8.7 billion in the first half of 2021, more than double the $4.3 billion invested in all of 2020.
Summary
SFOX (San Francisco Open Exchange), a digital asset prime broker, has launched what it calls the first crypto trading platform designed specifically for hedge funds and asset managers. The company, which says it has served more than 100,000 traders, investors and institutions since 2014, positions the product as a single destination for accessing major exchanges, OTC brokers and market makers, with the aim of allowing funds to execute sophisticated strategies at scale.
According to the company, SFOX's aggregated liquidity is deep enough that a single $50 million bitcoin trade would execute in milliseconds without moving the market, which it says is 10x more than any exchange. Global liquidity is described as 10x deeper within 1% of the mid-price. The platform offers more than a dozen order types and execution algorithms, which SFOX says give traders control over passive or aggressive execution, information leakage and price improvement, at no extra cost.
SFOX is also introducing a proprietary Trade Cost Analysis program, which it says is integrated into a crypto platform for the first time at no additional charge. Equity TCA tools have historically been limited to large firms that build or buy them at significant cost. SFOX argues the tool enables funds to demonstrate best price execution in crypto, a requirement already applied to other equities trading.
On settlement, SFOX offers Instant Settlement for pre-funded transactions and Post Trade Settlement, which uses a line of credit from SFOX so that hedge funds can trade on credit and settle outstanding amounts on a flexible timeline.
Social Capital founder and CEO Chamath Palihapitiya, an SFOX investor, said institutions are rapidly moving into digital currencies. Jackson Finio, SFOX's head of product and a former hedge fund manager, and co-founder and CEO Akbar Thobhani both framed the launch as reducing operational burden for crypto funds in a fragmented regulatory environment. The KPMG figures cited in the release indicate growing institutional participation in the broader digital asset sector.
According to the company, SFOX's aggregated liquidity is deep enough that a single $50 million bitcoin trade would execute in milliseconds without moving the market, which it says is 10x more than any exchange. Global liquidity is described as 10x deeper within 1% of the mid-price. The platform offers more than a dozen order types and execution algorithms, which SFOX says give traders control over passive or aggressive execution, information leakage and price improvement, at no extra cost.
SFOX is also introducing a proprietary Trade Cost Analysis program, which it says is integrated into a crypto platform for the first time at no additional charge. Equity TCA tools have historically been limited to large firms that build or buy them at significant cost. SFOX argues the tool enables funds to demonstrate best price execution in crypto, a requirement already applied to other equities trading.
On settlement, SFOX offers Instant Settlement for pre-funded transactions and Post Trade Settlement, which uses a line of credit from SFOX so that hedge funds can trade on credit and settle outstanding amounts on a flexible timeline.
Social Capital founder and CEO Chamath Palihapitiya, an SFOX investor, said institutions are rapidly moving into digital currencies. Jackson Finio, SFOX's head of product and a former hedge fund manager, and co-founder and CEO Akbar Thobhani both framed the launch as reducing operational burden for crypto funds in a fragmented regulatory environment. The KPMG figures cited in the release indicate growing institutional participation in the broader digital asset sector.
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