As per Barron’s report, Goldman Sachs is considering derivatives trading with bitcoin as well as other cryptocurrencies via a potential partnership with cryptocurrency exchange FTX.
The president of FTX’s U.S. division Brett Harrison in an interview with Barron’s stated that they have various FCMs [futures commission merchants] already devoted to blending technologically with the exchange. I’m sure you can think of a few big ones.
According to reports, FTX is seeking a license modification from the Commodities Futures Trading Commission (CFTC) that would allow it to function as both a cryptocurrency exchange and an intermediary for leveraged derivatives trading (FCM). Surprisingly, institutions such as Goldman Sachs currently hold this position.
This represents a significant shift in the wind, with institutions that would previously have handled counterparty transactions with leverage now turning to other, more experienced service offerings. According to the report, FTX appears to be absorbing some of the market shares of those who were previously considered direct competitors on Wall Street.
If FTX is successful in this endeavor, it threatens to eliminate the need for intermediaries such as Goldman Sachs by providing derivatives in-house rather than requiring the cooperation of another financial institution. The Futures Industry Association, which represents many of the intermediaries who would be affected, has expressed concern that FTX could expand beyond cryptocurrencies into other markets.
According to reports, the FTX integration could incorporate directly trading futures contracts, client intermingling, a possible on-ramp for Goldman to access the exchange, or offering capital top-ups (stock options to increase equity positions) for clients.
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