Paradigm has launched spreads trading in partnership with regulated cryptocurrency exchange FTX.
FTX becomes the third exchange to partner with Paradigm on futures spreads. The pair claim it will help with the development of a liquid interest rate curve in crypto.
The partnership will allow Paradigm users to trade the spread between spot, perpetuals and futures instruments, with guaranteed atomic execution and clearing of both legs on FTX.
Joint customers of Paradigm and FTX will be able to access a range of benefits from efficient spreads trading including the ability to generate yield via ‘cash and carry’ trades and funding rate farming.
In addition, customers will be able to roll expiring futures hedges more efficiently, while also receiving 50% less fees when trading spreads on Paradigm.
The two firms also claim that spreads trading on Paradigm is structurally less risky when compared to executing individual legs via a traditional exchange order book. Market makers, through this lower risk profile, will therefore be able to quote tighter prices in significantly larger sizes.
“With basis trading becoming a tradeable asset class on FTX, we should see significant interest from both crypto-natives trading yield as well as new investors in crypto who can now trade cash and carry as a single asset,” said Anand Gomes, chief executive of Paradigm.
“And looking ahead, combining the client base and product expertise of both companies will undoubtedly lead to more synergies and new product offerings further down the road.”
Earlier this year, FTX US made a strategic investment into IEX Group, the operator of the US-based Investors’ Exchange, in order to develop a transparent market structure for the buying, selling and trading of digital asset securities.
As part of the partnership, the two firms will work to create a market structure for digital assets, coming on the back of President Biden’s recent strategy announcement on crypto regulation.