Building a crypto trading platform for institutional investors

By Gerrit Van Wingerden

We are reaching a crucial point in the history of crypto development. While the general public may be focusing on the headlines about the ups and downs of cryptocurrency markets, the important thing is that the world is watching.

That includes institutional investors, who are increasingly interested in the benefits that crypto could offer their portfolios — to a degree that might have been unthinkable even six months ago. These investors, who have $130 trillion of assets under management worldwide, could have a huge impact on the crypto market, whose market cap remains under $300 billion.

However, many of these investors are still waiting to be convinced to take the leap into crypto. One thing that is still giving many institutional investors pause is the fact that trade management systems in the crypto world simply do not offer the sophistication they are used to in conventional trading. They’ve become accustomed to the support of reliable automated tools, and the prospect of working without those can be a serious roadblock.

As it stands now, cryptocurrency traders are often reduced to using spreadsheets and ad-hoc solutions that offer far less than they need in terms of optimizing trade execution, risk management and audit and compliance.

Solving pain points

Our mission at Caspian is to build a solution to this problem by offering a full-stack crypto trading and risk management platform developed for institutional investors. There are several real pain points that institutional investors face, and in building Caspian, we have focused on relieving these.

Crypto exchange fragmentation

One of the biggest issues for institutional investors is the fragmented nature of the market, requiring them to operate on several exchanges. Often, this forces them to come up with customized ways to deal with the limitations of each exchange — a time-consuming and frustrating exercise. Not only that, but this can lead to liquidity and slippage problems, as even small trades can consume liquidity and cause prices to slip.

Caspian offers an institutional-grade system that allows traders to avoid this barrier and seamlessly connect to multiple exchanges. Right now, Caspian connects to 15 major crypto-exchanges, including BitMEX, Gemini (FIX), GDAX (FIX), Bitfinex, Poloniex, BitFlyer and Binance. Caspian plans to add up to 40 additional trading platforms by Q3 of this year.

Our fully customizable Order and Execution Management System (OEMS) offers a unified trading interface across exchanges, fast order execution and amending, order shortcut management and more.

Portfolio management

Another huge pain point for institutional investors is portfolio management. Investors face major difficulties in tracking their real time and historical P&L (profits & loss). Our PMS (Portfolio Management System) allows users to see real-time and historical P&L over any time interval, as well as perform real-time monitoring of positions across exchanges and wallets.

Risk management

Then there is the issue of risk. Often, crypto-exchanges lack many of the security features offered by trading platforms in traditional markets — including experienced customer support and risk management capabilities.

Our Risk Management System (RMS) offers fully reconciled positions as well as accurate pricing and valuations, so there is only one view of the portfolio across the firm. It allows users to run simulation-based scenarios that generate risk metrics in seconds, allowing faster and more effective decisions.

Reporting and compliance

Reporting and compliance also present difficulties for institutional investors. They are required to keep extensive records for both internal and regulatory stakeholders, but these outputs are not available on most crypto exchanges. With the multiplicity of exchanges, the challenge only increases.

Caspian’s compliance server checks tens of thousands of simultaneous orders against dozens of complex portfolio-based compliance rules with 0.0005 seconds of latency or less and creates a full audit trail for every order, available anytime.

The Caspian reporting system allows users to utilize, create, format and receive graphical reports on their current trading and position activity in multiple formats, providing an easy snapshot of current status. Any report is also available as a web-based dashboard that users can access at any time and manipulate to gain real-time insights.

Building for the future

In short, Caspian’s comprehensive suite offers institutional investors the tools they need to fully inhabit the crypto space, backed by experienced customer support.

For Caspian, creating a crypto trading system that meets the needs of institutional investors is a benefit not only to those traders, but to the entire crypto ecosystem. Providing the infrastructure that institutions need to confidently enter the crypto world sets the stage for a much larger market. This brings needed volume, scale, stability and liquidity — not to mention the kind of credibility that can encourage even more players. In the end, we believe that building an effective trading solution will raise all boats to help crypto live up to its vast potential.

Gerrit Van Wingerden has served as Managing Director at Tora for the past 12 years. Prior to that Gerrit managed the development of high volume trading applications and analytical tools for various hedge funds and bulge bracket investment banks. Gerrit holds a B.S. in Computer Science from Stanford University