Nasdaq to Provide Surveillance Technology to Select Exchanges

This week, Forbes reported that Nasdaq, the second largest stock exchange in the world, has approved seven different cryptocurrency exchanges to work with their proprietary surveillance technology, which is reportedly designed to prevent fraud and market manipulation.

Nasdaq’s head of exchange and regulatory surveillance team, Tony Sio, was only ready to reveal the names of two of those exchanges, Gemini and SBI Virtual Currency, each of whom already publicized their involvement with Nasdaq last year. However, Sio did give some clues as to the types of guidelines that exchanges will need to follow. Sio explained:

“Historically, we don’t do such a large vetting process for our clients because they are much more well-known. But as we started working with less well-known names, startups, then we realized we needed to do this check process.”

Sio indicated in the interview that Nasdaq will have a preference for working with established exchanges who are fully compliant with US financial regulations, including KYC and AML measures that are controversial among many privacy advocates. The most unique qualification required by Nasdaq is that the exchanges are open about their listing process, to avoid the type of pay-to-play scenario that has long been suspected of many crypto exchanges. Sio said:

 

“The objective that we’re trying to work with crypto, is we see this as a growing asset class. So we’re working to help provide our technology, it could be around matching, it could be around surveillance, to help our customers as they grow their marketplaces.”

Just before the start of this year's World Economic Forum (WEF) at Davos, Adena Friedman, the President, and CEO of Nasdaq called the invention of cryptocurrency "a tremendous demonstration of genius and creativity." Friedman also alluded to the work that Nasdaq is doing with crypto exchanges. Friedman said:

"At Nasdaq, we are working to help cryptocurrencies gain investors’ trust by offering our technology for trade matching, clearing, and trade integrity to start-up exchanges."

Last week, CryptoGlobe reported that Nasdaq was part of a $20 million dollar investment, along with CitiBank and others, to fund the development of blockchain technologies.

OKEx Was the Top Crypto Derivatives Exchange in September, Report Shows

Leading cryptocurrency exchange OKEx was the top crypto derivatives exchange in the month of September, trading a total of $90.3 billion in total. Huobi followed suit, trading $84 billion.

According to CryptoCompare’s September 2019 Exchange Review, the crypto trading platform represented 33.7% of the daily derivatives volumes, trading $3.08 billion per day. Behind OKEx was Huobi with $2.82 billion traded a day, followed by BitMEX’s $1.88 billion.

Cryptocurrency exchanges like Deribit and CryptoFacilities, which is FCA-regulated, represented only $334 million and $74 million a day, respectively.

Top derivatives exchangesSource: CryptoCompare Exchange Review

The report notes that the most traded derivatives product by trading volume was BitMEX’s perpetual BTC futures contract, as its total trading volume for the month was of $41.7 billion. Other top traded products were BTC futures contracts expiring on September 27, with Huobi’s contract seeing $23.3 billion traded, while OKEx saw $17.4 billion traded.

OKEx’s lead when it comes to cryptocurrency derivatives was likely derived by its offering. The cryptocurrency exchange has various futures contracts being offered on its website – not just for BTC but for other top cryptocurrencies like BCH, BSV, EOS, XRP, and TRX.

Similarly the cryptocurrency exchange, which earlier this year announced it’s working on developing global compliance standards for cryptocurrency exchanges through a Self-Regulated Organization (SRO), offers perpetual swaps for these cryptos.

As CryptoGlobe reported, CryptoCompare’s report for August found similar results when it came to OKEx. Despite a market-wide drop in terms of derivatives trading volumes, the cryptocurrency exchange managed to capture over one-third of the market in August.

CryptoCompare’s September 2019 Exchange Review also found that lower-rated cryptocurrency exchanges – according to its Exchange Benchmark Ratings – have been gaining market share in terms of spot volumes.

Per the report, exchanges with an “E” rating represented a total trading volume of $179 billion in September, after seeing an increase of over 30% from the prior month. Exchanges like OKEx, which is A-rated, represented a smaller piece of the pie, with only 14.3% of the market share.