Proprietary trading of crypto derivatives is set for significant growth as firms seek to expand the numbers of markets traded and their coverage of underlying digital assets, a study by Acuiti has found.
The Acuiti Proprietary Trading in Crypto Derivatives report, which was published today, found that 97% of firms surveyed that were actively trading crypto derivatives planned to increase the number of venues on which they traded.
The report, which was commissioned by Avelacom and Deribit, analyses responses from 80 senior executives at proprietary trading firms across the globe, also found strong demand for the launch of listed futures and options contracts on a range of new underlying assets with Polkadot, Litecoin and Cardano the most in demand.
Crypto futures and options are a relatively new area of the digital assets trading eco-system but represent one of the fastest growing opportunities for exchanges and trading venues. Over three fifths of respondents expected cryptocurrency derivatives volumes to triple or more from current levels over the next three years.
The report splits respondents into two segments: proprietary trading firms that traded traditional assets before trading cryptocurrencies (“traditional” firms) and those that launched specifically to trade crypto (“specialist” firms).
Acuiti found significant differences in terms of how each segment is approaching the market with traditional firms having adopted a wider range of venue coverage and typically trading larger volumes than specialist firms.
However, the report found that the gap is set to narrow with specialist firms becoming increasingly sophisticated in how they trade and the number of markets that they are trading on.
The report profiles which venues are currently being traded by proprietary trading firms and which ones they are looking to start trade on. The report also analyses the differences that firms experience when trading specialist crypto derivatives markets versus the traditional markets that offer crypto derivatives.
In addition, the report covers attitudes to DeFi platforms, crypto custodians, latency requirements and the anticipated future growth of crypto derivatives.
“Proprietary trading firms tend to be early adopters of new listed derivatives contracts and crypto derivatives are no exception,” says Will Mitting, managing director and founder of Acuiti.
“For exchanges and venues offering crypto derivatives, proprietary trading flows are likely to drive significant volume growth in existing and new products and so form a key part of the overall market.
“This study finds a very strong appetite for more instruments to be launched and predicts significant growth for this exciting asset class.”
To download the full report, visit: www.acuiti.io/proprietary-trading-in-crypto-derivatives