Hong Kong-based Crypto Exchange to Use London Stock Exchange's (LSE) Trading Software

  • London Stock Exchange Group Plc (LSEG) has agreed to let ATOM Group use its software.
  • Software to be used by ATOM's Hong Kong-based crypto exchange, AAX. 

The London Stock Exchange Group Plc (LSEG) has reportedly decided to sell some of its proprietary trading technology to the ATOM Group, a Hong Kong-registered multinational fintech firm.

According to the announcement’s press release, the ATOM Group is planning to use LSEG’s trading software for its cryptoasset exchange (called AAX). The integration of LSEG Technology's “Millennium Exchange” platform is scheduled to be completed during the first half of this year. Notably, AAX is the world’s first digital currency exchange that will be built on LSEG’s trading platform.

At present, the Hong Kong (HKEX) and Singapore (SGX) Stock Exchanges are using “matching engines” developed by the LSEG. Integrating the institutional-grade trading software onto its exchange platform will allow the ATOM Group to provide “high performance, reliable and trusted services to investors”, the announcement noted. Institutional investors have not yet made substantial investments into digital assets because they are concerned about the lack of proper security on centralized crypto exchanges.

LSEG's Millennium Exchange "Matching Engine"

Commenting on the importance of providing reliable and high-performance trading solutions, Ann Neidenbach, the chief information officer (CIO) at LSEG Technology, remarked:

We are delighted to have been selected by ATOM to provide a best-in-class technology solution to help power its new exchange. It underlines Millennium Exchange's reputation for performance, scalability, flexibility and reliability and we look forward to working with the AAX team ahead of the launch in H1 2019.

Crypto market analysts are expecting more regulatory clarity this year and a greater level of transparency. Acknowledging the need for compliance and better trading tools, Peter Lin, the CEO of ATOM Group, said:

The digital asset marketplace faces a critical need for more industry best practice in order to build greater investor confidence. AAX will leverage LSEG Technology's platform and expertise to deliver a world-class exchange that provides fair, trusted and secure digital asset trading for all.

In mid-October 2015, Carlson Tong Ka-Shing, the head of Hong Kong’s Securities and Futures Commission (SFC), had said the special administrative region was planning on tightening crypto regulations for local exchanges. Ka-Shing explained that there had been increasing concerns about the risks associated with trading on unregulated platforms.

Expecting Greater Institutional Involvement

Due to increased regulatory oversight expected this year, it’s likely that new and existing crypto exchanges in Hong Kong and in other jurisdictions will be implementing improved security measures. Anticipating greater participation and contributions from institutional players, Ling noted: 

With institutions such as Fidelity Investments entering the market and others also gearing up for entry, we predict the digital asset class is primed for entry by institutional and mainstream investors in 2019.

Notably, the “agreement with LSEG Technology” will allow AAX to offer:

  • “Institutional-grade technology” as used by established traditional exchanges including the LSEG, HKEX and SGX,
  • “Scalable, compliant platform” as used by regulated markets worldwide, and
  • “Industry standard process and operational excellence.”

The AAX platform will also reportedly “leverage global security” tools provided by Kroll, an online security solutions provider.

Overstock CEO Sells Shares in His Company to Invest in Blockchain Projects

Patrick Byrne, the chief executive officer of Overstock.com (OSTK), has recently lashed out at investors who questioned his sale of 900,000 of his ‘founders shares’ in the company. Justifying his move, he revealed he needed the funds to invest in blockchain projects.

According to Business Insider, Byrne recently sent a letter to shareholders after the company’s stock prices plunged over 21% this week to their lowest since 2012, after he revealed he sold 500,000 of his shares earlier this week.

On Friday, the CEO revealed he sold an additional 400,000 shares, meaning he sold over 15% of his stake in the company. Although Overstock’s shares recovered on Friday, May 17, Byrne’s letter to shareholders was notable. In it, he wrote:

I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges.

The CEO added that he doesn’t plan on giving such an explanation again, justifying that he owes shareholders “staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock.”

He noted that the “unanticipated stir” caused by his sale was unexpected, and added “I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life.”

Byrne is notably Overstock’s largest shareholder, and noted he told investors a year ago he would be making “significant sales” to fund different projects, including those related to blockchain technologies and, presumably, cryptocurrencies.

In fact, the libertarian sold 775,000 of his shares in September of last year, before this week’s sale. The stock’s price has fallen roughly 90% from its record high in January of 2018, when Overstock was benefitting from its cryptocurrency ventures and accompanying the cryptocurrency market’s performance.

In November of last year, Byrne revealed he had plans to sell Overstock’s retail business and go “all-in” on cryptocurrencies and blockchain technology. The CEO’s plan would see the company focus on its fully-owned subsidiary Medici Ventures, which has been invested in blockchain-related startups, after selling its retail business.

Overstock's price performance over the last two yearsSource: Yahoo Finance

Byrne has notably been battling short sellers targeting Overstock, as the firm competes with the likes of eBay and Amazon. Financial analytics firm S3 Partners has estimated short bets against it stand at $157 million, or 50% of its float. This makes it more targeted by short sellers than 99% of companies in the U.S.

Despite the company’s performance on exchanges, Overstock has since launched its tZERO security trading platform, and was one of the first companies to pay a “portion” of its taxes using bitcoin in Ohio.