Global Trading talks to Jonathan Hirsch, associate director and head of institutional FX and crypto sales at Swissquote, about the journey the bank took to become a major player in digital assets, and what their recently announced partnership with B2C2 will deliver for clients.
One of the top retail FX players in Switzerland, Swissquote Bank has also made moves in the institutional and crypto markets. In May, B2C2, an institutional liquidity provider for digital assets, partnered with Swissquote, in order to deepen liquidity on Swissquote’s SQX exchange.
B2C2’s presence on SQX is designed to expand the already deep liquidity available to traders, while SQX opens a new stream of market participants to B2C2’s trading ecosystem. SQX is a central limit order book (CLOB) providing deep liquidity as well as a way to trade cryptocurrencies to a range of market participants. Users can trade, hold and transfer actual crypto assets in their Swissquote account, backed by the security of a regulated Swiss bank.
How did SQX become the “biggest and strongest” digital assets exchange in Switzerland – what was the journey taken to get there?
Being a bank offering crypto could be considered somewhat controversial, particularly as the crypto market was not yet institutionalised back in the day. But I think this is where we really see the visionary side of Swissquote. We are placed roughly fourth or fifth, in custody in terms, for crypto assets. We are also cross-asset. People have definitely seen the advantage of being quick to market with crypto, but there are also other advantages. When you have crypto winters, you need to ensure you are diversified.
Do you have competitors just on the crypto side?
Yes, definitely. But pointing to competitors across our business model is difficult, as we provide all asset classes. By sending out a message to the market that we are crypto-friendly, this has also helped us grow alongside our client demands. Now, we are working on other aspects, such as the OTC side of things. In terms of obstacles to get to this point, I think regulation was the biggest one. Even though they have been opening the door to crypto for a while, FINMA, the Swiss Financial Market Supervisory Authority, have been smart about it. Not only did they want to have a clear set of rules and boundaries, but they have also been very dynamic when it comes to evaluating the market and making decisions. I think there has been a good balance.
How important is it for users to have crypto assets in their Swissquote account, backed by the security of a regulated Swiss bank?
I would say it is more relevant today than it was a couple of years ago. Our model of banking is not the same as for investment banking. We are not highly exposed to a wide range different financial products. We generate commission based on trading activity. Having assets under custody rather than assets under management also helps. Swissquote is a public company on the Swiss stock exchange with a market cap of more than CHF4 billion. Our stock price has been increasing year on year. On top of that, we have the insurance of being a Swiss bank, which, worldwide, is considered to be a very good brand. All of the above projects safety and security.
Can you provide some detail on the partnership with B2C2 – how does it support the above?
The partnership with B2C2 definitely enhances our offering, it is a big selling point for institutional players. When you have big players in the space approaching you, it tends to signal that you are doing something right.
In terms of where we can both grow, thanks to this partnership, I think liquidity is the main avenue. We need, as a counterparty, to ensure we are plugged into as much liquidity as we can. The idea is to ensure that we can serve a range of clients. In terms of trading needs, we are going to get more sophisticated on the crypto side.
With enhanced liquidity on the exchange, some clients have seen the difference in pricing. Others are happy to see a new partnership and how that plays out on the institutional side.
What are your plans for the future?
The partnership with B2C2 is definitely part of our strategy to extend the marketplace in the coming months. Our plans for the future are similar to many others in the crypto space. Making sure we are quick to market whenever there are new developments and making sure we continue to push the custody side of things.
At the end of the day, if there is another crypto winter in a year or two, we want to ensure that our clients can switch from crypto to traditional assets, instantly. We want to make sense to everybody, globally, not just in terms of one asset, whether it is crypto or FX. We want to provide a treasury offering to crypto players as well as financial institutions.
©Markets Media Europe 2024
