‘Prime Brokerage’ for Crypto: Apifiny Launches Institutional Platform to Connect Exchange Liquidity

Institutions will now be able to trade on every single crypto market simultaneously thanks to GlobalX, an API platform launched on March 31 by San Francisco-based firm Apifiny. The startup hired former executives of Google X, Kraken and AlphaPoint to promote the service.

Specifically, Josh Li will act as Apifiny’s chief business officer, having previous experience in Google and Google X, Alphabet’s innovation arm. Michael Fertman will lead the B2B marketing efforts as VP Marketing of Apifiny, coming from the security tokens startup AlphaPoint.

Finally, Scott Eilbeck was brought on as VP of strategic partnerships and institutional sales. He recently served as head of Over the Counter (OTC) markets at Kraken, while counting JP Morgan and Bear Stearns under past experiences.

Cointelegraph spoke with Li, Fertman and Apifiny’s CTO, Ashu Swami, to learn more about the GlobalX platform.

Connecting global liquidity

GlobalX works by integrating all of the world’s exchanges into one platform available to institutional traders. The firm opens business accounts with as many exchanges as possible across the entire world, while presenting a unified interface to its clients.

As Swami explained, the immediate reason for this is simple — it allows institutional traders to make large orders without depressing the price on one specific exchange. 

By distributing the order across global markets, the traders tap into global crypto liquidity, instead of just one crypto exchange. But there are other benefits, as he elaborated:

“These quantitative hedge funds are in the business of finding patterns. Even with things like ‘how does the sunrise and clouds affect stock prices?’ Very hypothetical things. And by being able to access the global prices in regional markets, they can create and implement different kinds of new strategies.”

Furthermore, some exchanges also limit the number of orders in a given period of time. Spreading the load between multiple platforms would allow to decrease latency and increase trading frequency, as Swami explained.

The core proposition of GlobalX is “increasing the bandwidth” available for institutional trading desks. As Fertman highlighted, trading on multiple exchanges is complex:

“If you look at before, in order to execute these global strategies, an institutional investor would have to set up accounts on multiple exchanges, globally. In order to execute rapidly, they would need separate sets of APIs to different exchanges. [...] On the front end, it is the equivalent of calling 17 different brokers to execute one trade, and not through one interface.”

GlobalX also provides a function that few institutional trading desks can have on their own — access to all local fiat-to-crypto markets.

Connecting them can also be a way to use crypto for trading opportunities between traditional foreign exchange markets, Swami said.

Is this a crypto broker?

Crypto exchanges are, in traditional terms, a combination of both an exchange and a broker. Generally, only very high-value clients can directly access traditional exchanges, while retail buyers can only do so through brokers.

GlobalX can be seen as reintroducing the concept of a broker, as its clients will not necessarily have accounts with the exchanges they trade on. When asked about this, Li replied:

“I think what we are doing is somewhat unique in that we're trying to really build this new way of doing business. [...] We're not directly competing with exchanges, we see them as strategic partners. We’re trying to help solve this global problem where liquidity pools are isolated to only a specific country or set of customers.”

Swami highlighted that the worlds of crypto and traditional securities are very different. He replied:

“This industry is evolving in an organic fashion. And it's very hard to use the existing securities industry’s labels and slap them on the activities that we are doing. But if you had to draw the closest analogy then I think our role is that of a prime broker.”

In traditional markets, prime brokerage is usually provided by investment banks to hedge funds to satisfy some specialized needs.

GlobalX could be considered as a sign that the crypto industry is maturing as an asset class. Its team stressed that connecting global liquidity could finally bring large institutional investors on board.