San Juan Mercantile Exchange (SJMX) has announced that it has partnered with Mercury Digital Assets to create an “OTC dark pool” venue for digital assets.
— San Juan Mercantile Exchange (@SJMXCHANGE) April 2, 2019
The companies made the joint announcement on Tuesday, claiming “the first trades in the dark pool have been successfully completed”.
For institutional clients in the digital assets space
The announcement states that the dark pool and OTC liquidity was built for the needs of institutional clients and could also be accessed via the exchange’s FIX API or Mercury’s proprietary execution and order management system called BEACON.
“BEACON allows users to participate in the digital asset markets with all the reliability, efficiency, and security of a mature technology platform. Through BEACON, users can access an array of OTC and dark pools of liquidity, such as those of SJMX, as well as lit venues,” said the Mercury team in a joint press release.
Joe Piotrowski, COO of Mercury, said: “Digital assets are important new trading vehicles that have seen broad adoption by traditional market participants. To meet the sophisticated needs of our institutional client base, we’ve worked diligently to deliver BEACON to our users to provide a reliable, professional-grade platform coupled with an intuitive UX. Further, SJMX has been an ideal partner for us as it prioritises secure trading.”
Looking to be a leader for the digital assets OTC market
Rick Beaman, the CEO of SJMX and former CEO of the NASDAQ Futures Exchange (NFX), said he was pleased to have “successfully completed the inaugural trades through our ecosystem from execution to settlement. It is an important milestone in our mission to be the market leader in offering a secure and efficient infrastructure for institutional market participants to buy and sell digital assets.”
“Our partners at Mercury Digital Assets continue to set a high bar with their BEACON interface.”
The firm said that through its “international financial entity license”, the San Juan-based bank had created a “regulated banking solution designed to deliver efficient fiat and digital asset transactions and custody.”
“This seamless banking solution enables the Dark Pool to leverage real-time limit management, transaction settlement, and information aggregation,” claims Beaman, based on the holdings in the exchange’s own bank.
Adhering to CFTC guidelines
The exchange has said that it will be “utilising industry practices modelled after CFTC guidelines to create a more compliant spot market for digital assets”.
The world of digital assets and more specifically Bitcoin and crypto OTC markets is often seen as the Wild West of rogue brokers trying to connect buyers and sellers.
There certainly seems to be an opportunity for an experienced and compliant team to enter this market using a model such as dark pools, which were known to be a key factor in bringing order to the unruly oil and commodity markets of the late 1990s.
The announcement of the first completed trades is a good first step, but many in the industry will be waiting for SJMX’s eventual full-scale platform launch and the release of the firm’s live order book for digital asset trades.