.QCPCapital and SBI Alpha Trading have executed crypto market's first uncleared options trade using a unique, bankruptcy-resilient, multi-custodian network. Reports godbole17.
Singapore-based QCP Capital and Japan-based SBI Alpha Trading on Thursday said they executed a crypto options trade without involving a clearing house, the first such transaction in the digital asset industry.
London-based Zodia Custody acted as a custodian for collateral while Corda Network, developed by R3, played a role in risk management. The trading parties collected the collateral at the start of the transaction and locked the same in an account at an independent custodian, which was controlled by all three parties to mitigate the counterparty risk stemming from the absence of a clearing house. All exchange-traded derivatives and most over-the-counter derivatives involve a clearing house that validates and finalised the transaction, ensuring the parties to the trade honor their contractual obligations.
The unique risk management technique is consistent with International Swaps and Derivatives Association's requirements for uncleared derivatives in the multi-trillion dollar fiat currency swap business.
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