Interdealer Broker TP ICAP Joins Consortium to Launch Crypto Trading Services

Per a June 29 Reuters report, TP ICAP, the world’s largest interdealer broker, has partnered with Standard Chartered and Fidelity Investments to launch a crypto-trading platform.

The venture, which awaits approval from the U.K.’s Financial Conduct Authority, will integrate connectivity and a post-trade structure into a network of crypto-asset custodians.

The TP ICAP-led consortium consists of StanChart’s digital custody unit (Zodia), Fidelity Digital Assets, and Amsterdam-based Flow Traders. Zodia and Fidelity will act as crypto asset custodians, while Flow Traders will provide liquidity to the platform. 

TP ICAP’s motivation for forming this consortium is to broaden its footprint across global markets and offer digital asset exposure to its institutional investors.

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The ambitious venture seeks to make crypto trading more like traditional assets such as bonds and stocks. The platform, set to launch in Q2 of this year, will initially offer BTC trading, with top altcoin ETH added later. 

TP ICAP ventured into the crypto space in 2019 when they launched bitcoin futures and options on CME. The interdealer broker now intends to expand its suite of offerings by providing various derivative products. 

A Natural Evolution in Market Structure 

TP ICAP’s move to build a post-trade infrastructure linked to a network of crypto custodians while providing separate execution and settlement is revolutionary in the market.

Risk-averse investors often stay away from trading avenues that increase credit risk by combining crypto execution and custody services on one platform.

According to Simon Forster, Co-Head of Digital Assets at TP ICAP, many clients are interested in crypto. Still, they often lack access to the asset class due to limitations in market structure. He explained that most trading platforms require pre-funding and custodial roles, resulting in a conflict of interest and fragmented liquidity.

Forster is upbeat that the TP ICAP partnership and resultant crypto trading venue will serve as a “natural evolution in market structure.” He asserts that the platform will help crypto-assets such as bitcoin and Ether be more accessible to the wholesale financial market.  

Duncan Trenholme, co-head of digital assets at TP ICAP, reiterated his colleague’s point, stating:

“In most of our conversations with clients, they want a separation of custodial roles from execution capabilities which is opposite to the models that exist currently.”

Institutional Investors Warm to Crypto 

The imminent rollout of a trading platform by a TP ICAP-led group is the latest endorsement of the digital assets sector from institutions.

Over the past few months, dedicated digital asset hedge funds such as Grayscale Investments have seen record inflows, while major banks have started offering crypto services. 

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For instance, TP ICAP’s partner, StanChart, recently announced it would set up a separate exchange and brokerage platform to offer bitcoin to institutional clients in Britain and Europe. The deal will be jointly launched by S.C. Ventures, StanChart’s innovation arm, and Hong Kong’s B.C. Technology Group.