Crypto Never Sleeps。
In June 2022, two market maker giants, Citadel Securities and Virtu Financial, said they were developing a crypto product with the help of Fidelity Investments and Charles Schwab to increase access to digital assets.
After one year of preparation, the cryptocurrency trading platform EDX Markets announced the start of trading on June 20, 2023, immediately making headlines in the industry.
After discovering that EDX Markets was supported by top Wall Street financial consortiums such as Citadel Securities, Sequoia, Fidelity, Charles Schwab, Paradigm, GTS, and GSR Markets, the crypto market reversed the sluggish situation of the past few days, and the price of Bitcoin once exceeded US$29,000.
What is the origin of EDX Markets, a new crypto market platform? Why does it have such a big impact? Golden Finance reporter Cryptonaitive answered with a question: What is EDX Markets?
1. Why was EDX Markets established?
According to the official website of EDX Markets, EDX Markets is a new digital asset market designed to meet the needs of crypto-native companies and the world's largest financial institutions, allowing traditional financial markets to conduct secure and efficient digital asset trading and clearing on a dedicated crypto platform.
2. What is the difference between EDX Markets and mainstream crypto exchanges?
Unlike mainstream cryptocurrency exchanges in the crypto space that integrate custody, trading, and clearing and settlement, EDX Markets does not custody clients’ digital assets, nor does it directly target retail investors. Instead, it uses a similar approach to executing transactions on the New York Stock Exchange or Nasdaq. Instead, users will buy and sell crypto assets through financial intermediaries. In addition, EDX Markets will launch EDX Clearing later this year to settle transactions matched on EDX Markets.
During the bilateral settlement phase, EDX Markets acts as a clearing agent, calculating the settlement obligations between the parties and notifying each member and authorized custodian with which counterparty the member has traded, and the amount of the transaction. Members can independently have their own transaction data to verify the settlement calculations performed by EDX Markets. EDX Markets is not involved in the transmission of any fiat currency pairs (cash) or tokens, which is only carried out through authorized custodians. Similarly, EDX Markets is not involved in the flow of funds. Settlements will be carried out according to the legal agreement between the member and its authorized custodian, and will not be traced back to EDX Markets.
Therefore, EDX Markets' profit source will come from the membership fees or service fees of financial intermediaries. Currently, EDX Markets is temporarily operating without membership fees (fee holiday).
3. Who are the investors of EDX Markets?
EDX Markets is supported by major financial consortiums. EDX Markets' founding investors include Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia, Virtu Financial, Charles R. Schwab, etc.
According to a press release from EDX Markets on June 20, EDX Markets recently completed a new round of financing and welcomed more strategic investors, including Miami International Holdings, DV Crypto, GTS, GSR Markets LTD and HRT Technology.
4. Who is the financial backer behind EDX Markets?
Citadel Securities. Let’s not talk about Citadel Securities’ investments, but take a look at the organizational structure of EDX Markets.
EDX Markets CEO is Jamil Nazarali, whose previous employer is Citadel Securities. Prior to this position, Jamil held several positions at Citadel Securities, including Director of Global Business Development and Head of Citadel Execution Services. Previously, Jamil was the Global Head of Electronic Trading at Knight Capital Group and worked as a management consultant at Ernst & Young and Bain Consulting. Jamil has held a number of industry and board positions, including Chairman of the Board of Members Exchange (MEMX), a member of the U.S. Securities and Exchange Commission (SEC) Equity Market Structure Advisory Committee, and a member of the Board of Directors of BATS Holdings.
The chairman of the board of EDX Markets is Zhao Peng. Zhao Peng is the CEO of Citadel Securities, which is the number one market maker on Wall Street and is headquartered in Chicago. 27% of transactions in the US stock market are processed by Citadel Securities' automated trading platform. Zhao Peng was born in Beijing and joined the company directly after obtaining his doctorate degree in Berkeley, California, as a senior quantitative researcher. He is one of the early veterans of Citadel Securities and became the CEO of Citadel Securities in 2017. Today, Citadel Securities has more than 1,000 professionals worldwide and provides liquidity in more than 120 venues in more than 35 countries.
According to the recruitment information on EDX Markets' official website, EDX Markets is recruiting engineers based in Chicago, which is consistent with the information that Citadel Securities is headquartered in Chicago.
5. Who are Citadel and Citadel Securities? What is their relationship with the crypto market?
Founded in 1990, Citadel Group is one of the most successful and respected alternative asset investment companies in the world. Citadel Investment Group has two major businesses: Citadel and Citadel Securities. Citadel is a leading global hedge fund with more than $38 billion in assets under management; Citadel Securities is a leading global market maker that provides 27% of U.S. stock market transactions.
Speaking of Citadel, people in the crypto industry are no strangers. For example, PeopelDAO (formerly ConstitutionDAO) was created because Citadel Group founder Griffin bid $43 million to buy a copy of the U.S. Constitution in 2022; Citadel Securities completed $1.15 billion in financing at a valuation of $22 billion in early 2022, led by Sequoia Capital and crypto VC investment company Paradigm, which was the first time it accepted external investment since its establishment; Citadel Securities is one of the main market makers on Robinhood, and there are a large number of cryptocurrency transactions on Robinhood.
Griffin, the founder of Citadel Group, had previously opposed cryptocurrencies, but later changed his attitude. In 2023, he once said, "Cryptocurrency has been one of the extremely great stories in finance over the past fifteen years... Castle Investment will enter the cryptocurrency market this year and hopes to expand crypto assets in the coming months." into the company’s global market strategy.”
6. Is EDX Markets a compliant exchange?
EDX Markets explicitly states that EDX Markets is not registered with the U.S. Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FIRA).
7. What crypto tokens can be traded on EDX Markets?
EDX Markets currently only offers spot trading for four trading pairs: BTC, ETH, LTC and BCH. Except for ETH, the other three are PoW tokens.
“EDX Markets only offers a limited set of tokens for trading because we don’t want to trade things that could be securities until there is more clarity on regulation,” EDX Markets CEO Jamil Nazarali said in April 2023.
8. Who can become an EDX Markets member?
As the answer to question 2, only institutions can apply to become EDX members, not individuals. Therefore, EDX does not provide direct retail accounts.
9. How to become an EDX Markets member institution?
Step 1: Membership Registration: Send an email to membership@edxmarkets.com with your company name and contact information or fill out the inquiry form.
Step 2. Coordinate an Onboarding Meeting: The EDX Membership Team will contact you to schedule an introductory meeting with the EDX Business Development Team to discuss your company’s goals, answer questions and schedule an initial technical onboarding meeting.
Step 3, Technical Access: Your company will be introduced to the EDX Technical Access team, who will guide you through the connection and certification process, discussing network connectivity, application program interfaces, functional and operational issues.
Step 4. Prepare to trade: The EDX technical team will coordinate conformance testing for your trading application and guide you through the setup in the member portal.
10. Does EDX Markets have an app?
As mentioned in points 2 and 8, EDX Markets does not provide an App front end or trading GUI. Trading access is only possible via API.