It appears that Goldman Sachs, one of the major investment banks in the United States, is trying to incorporate some of its derivative products into the FTX.US crypto derivatives offering.
Goldman Sachs has been in talks with FTX on regulatory help and its IPO, and intends to expand its crypto derivatives offering by leveraging some of its own derivatives tools and services, Barron’s reported.
FTX.US, the US affiliate of global cryptocurrency exchange FTX, is attempting to offer brokerage services for its derivatives offerings. This would allow the cryptocurrency exchange to manage collateral and margin requirements internally rather than relying on “Futures Commission Merchants” (FCMs). FTX.US President Brett Harrison said:
“We have multiple FCMs that have already committed to technologically integrating with the exchange. There are several big ones that they can probably name.”
The United States Commodity Futures Trading Commission (CFTC) has requested public comment on the amendment requested by the exchange. The regulator also believes that the FTX proposal warrants scrutiny, given that it would lead to a monopoly by large investment banks such as Goldman.
According to people familiar with the matter, the integration of derivatives services of Goldman Sachs would offer to “trade futures directly, introduce clients and act as an on-ramp to the exchange, or provide capital top-ups for clients.”
FTX has argued that an integrated brokerage model would help make the market more stable and free. In a recent roundtable discussion with the CFTC, CEO Sam Bankman-Fried answered several questions about crypto derivatives and FTX’s proposal to integrate its own FCM.
Crypto derivatives trading has been a topic of debate for quite some time, as many European countries, and even the United States, have banned most cryptocurrency exchanges from offering leverage trading. Binance had to shut down its derivatives offerings in several European countries following various regulatory interventions.
On the one hand, the CFTC has called for greater scrutiny of FTX’s amendment lawsuit, while on the other hand, the exchange argues that an integrated brokerage model would help them calculate margin requirements every 30 seconds, rather than waiting. the next day to liquidate the positions.
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