We’ve been following the emerging world of bitcoin related trading startups. A coming entrant that recently went public with its site and will be soon launching a public beta program is Crypto St. For FX readers, Crypto St represents probably the purest form of ‘forex’ trading among the new players and plans to offer ‘commission-less’ trading. Additionally, they plan on integrating familiar order types for traders such as Short and Long positions, market and limit orders, and stop losses. In contrast though to the majority of retail forex brokers, Crypto St is taking what they call a “purely-platform approach” and therefore will send orders to exchanges, rather than acting as a counter party to trades. To gain an exclusive ‘sneak peak’ of the trading platform and the emerging bitcoin trading sector, Forex Magnates spoke to Crypto St’s Founder and CEO Shamoon Siddiqui, and its CMO George Burke.
A Meta Forex Exchange
Coming from a background that included FX trading, Siddiqui explained that Crypto St is aiming to create both a diverse and easy to use platform that will appeal to existing traders. He said “Crypto St is a meta-exchange, that we have been working on for over a year. The trading platform will offer cross-crypto currency exchange. If you have dollars, you can exchange them to bitcoins, bitcoins you can change into litecoins.” Along this line, Crypto St is also aiming to provide more than just crypto currencies on the platform, and include majors such as the euro, British pound, Japanese yen, Canadian, and US Dollar for exchange.
Similar to other coming products, Crypto St’s platform aggregates liquidity from numerous exchanges. Because of the cross-exchange sourcing of liquidity, Burke explained that traders have the opportunity to take advantage of arbitrage scenarios where exchanges bid/ask spreads are crossed. Burke added that “arbitrage opportunities are expected to diminish as more traders get involved. “ As such, in the future, Crypto St is aiming to internalize enough of its order flow within its own system without the need of sending orders to external exchanges.
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One of unique features of Crypto St is its No-Fee system. Using a playbook from forex brokers, Siddiqui explained that “we are not a broker-dealer, but will widen spreads from the market, similar to forex dealers. For traders, ‘what you see is what you get’, with commissions added into the spread”. In addition, to commissionless trading, Crypto St is planning on offering free withdrawals to verified customers.
In terms of comparing to forex brokers, one of the difficulties firms experience is handling of latent feeds and mispricing from the external sources. Faulty pricing can cause quotes on a broker’s trading platform to diverge from those of the market and lead to orders being rejected or executed at bad prices.
With bitcoins, slow feeds are even a greater problem, with traders often experiencing delayed quotes from overloaded exchanges such as Mt Gox. In terms of this problem, we asked how Crypto St will handle “what you see is what you get” pricing that may no longer exist in the market due to faulty feeds? Answering, Burke explained that the platform is being built with a “scoring system to rate pricing from exchanges. Underperforming exchanges with slow executions can be removed from the platform”.
In addition to spot exchange trading, Siddiqui stated that he believes there will be a lot of interest for options products which “can be used to hedge against bitcoin’s volatility”. Siddiqui concluded by telling Forex Magnates that Crypto St isn’t singling itself to one digital currency and said “with crypto currencies, it’s not where we are now but what the technology will be at the end that is important”. Currently, Crypto St has begun to offer live testing of the platform to a number of users. A full rollout is expected later this summer.