Major financial institutions of Wall Street come together to set up digital assets exchange with on-chain settlement

EDXM will be the first of its kind crypto exchange to separate the responsibility to operate the exchange from the entities that trade on it

By Shashank Bhardwaj

Image: Shutterstock

Trading titans and brokerage firms in the United States are constructing a crypto exchange. The new exchange will bring investing in digital assets into the realm of traditional finance. It will mimic the structure of how other asset classes trade. Major financial institutions will back the new exchange. Charles Schwab, Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital and Virtu Financial are among them.

The new exchange will be known as EDX Markets (EDXM). It will function as a completely autonomous entity. Jamil Nazarali, the CEO, will be in charge. He previously worked as a senior executive at Citadel Securities. Representatives of the founding members serve on the EDXM board of directors. The board of directors include Tony Acuña-Rohter, and David Forman, other than Nazarali. In an official statement, they said,

"Crypto is a $1 trillion global asset class with over 300 million participants and pent-up demand from millions more. Unlocking this demand requires a platform that can meet the needs of both retail traders and institutional investors with high compliance and security standards."

To reduce spreads and improve transparency, EDXM will enable a highly liquid crypto ecosystem. It will achieve the goal by aggregating liquidity from multiple market makers. EDXM's focus on price discovery and the platform's efficiency is expected to result in better prices for investors than current crypto exchanges. The initiative will be a 'first-of-its-kind exchange.' It will provide 'safer, faster and more efficient cryptocurrency trading' for investors.

It is important to note that the Members Exchange (MEMX) will provide the EDXM technology infrastructure. MEMX is a 2019 market operator that is innovative and customer-focused. EDXM is expected to meet the needs of the world's largest and most sophisticated financial institutions by utilising scalable exchange architecture purpose-built by MEMX to extend across a range of markets. It will also cater to the requirements of retail investors. Talking about the partnership, Jonathan Kellner, CEO of MEMX, said that this new venture 'marks a new chapter for MEMX as we bring our scalable market technology to other asset classes and market operators.'

Through a network of digital custodians, EDXM hopes to settle trades on a blockchain. According to Jamil,

"We look forward to welcoming additional participants to the exchange, which will drive ongoing trading in this important asset class while creating a virtuous cycle of continually enhanced liquidity and efficiency supported by MEMX’s cutting-edge technology."

He went on to say that crypto has piqued the interest of many investors. However, he believes that they are 'worried about a potential hack or other unknowns with existing crypto exchanges.' EDXM's systems will be housed in a data centre in Secaucus, New Jersey. It will use software to ensure that trades are processed in the order in which they are received. This method of order processing and management differs from that used by the majority of crypto exchanges. In layman's terms, EDXM seeks to separate the 'responsibility for operating the exchange from the entities trading on it.'

Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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