Chicago-based cryptocurrency spot and derivatives trading platform ErisX has this week launched a new block trading API (application programming interface) that will allow its Clearing House members to execute large orders without affecting market conditions and eliminating settlement risks.
The new API dubbed REST will allow block trading for all of the spot markets as well as futures markets supported by the platform. These are Bitcoin [BTC], Bitcoin Cash [BCH], Ethereum [ETH], and Litecoin [LTC]. The API will however support Bitcoin and Ether futures markets only. The service will allow for private large volume deals in any product which enhances OTC trading.
The idea behind an OTC trade is to avoid using a platform order book. This is important because OTC traders are generally high volume traders. If a taker placed a high volume trade on an exchange order book, this is a potential indicator possibly for a turn in the asset price usually in the undesirable direction.
A seller would want to maintain a high price for their assets while a buyer would desire the opposite. If a seller posts a large sell order, this will trigger a fall in prices and vice versa. To avoid this, ErisX now offers its large volume traders the ability to negotiate private deals using their REST API and consequently enabling the trade unbeknownst to other traders. There are mandatory requirements for reporting successful trades after the fact.
This feature supports the following trade limits: 10+ BTC, 100+ BCH, 100+ ETH, and 250+ LTC. For the futures trade, at least 10 BTC contracts and 50 ETH contracts will be supported.
“ErisX is implementing a workflow that is familiar to capital markets professionals and improves upon crypto OTC practices,” the exchange announced on Tuesday in a blog post. “Registered market participants will be able to submit pre-negotiated block trades to Eris Exchange through our REST-based API, or our Trading Interface, which after automated review, will be settled and cleared at Eris Clearing. This removes the headaches of OTC escrow based workflows and eliminates Counterparty Settlement risk.”
Carlos Mosquera Benatuil, CEO of Solidus OTC said in a statement that “By introducing block trading capabilities under a CFTC-regulated entity, they eliminate counterparty settlement risk while limiting market impact […] This is another example of ErisX bringing familiarity and security to the cryptocurrency markets.”
Using APIs to facilitate large volume OTC trades is now a staple in the traditional asset market but now has been ported over to the nascent field of cryptocurrency trading.
it is the introduction of such features to the novel markets that may attract institutional investors and probably sway them into putting their money in crypto. Familiarity breeds trust.