Wall Street banks such as Goldman Sachs seek partnerships with crypto exchange FTX. The reason is to integrate derivatives trading options.
A successful partnership between FTX and Goldman has several benefits. Firstly, it will provide clients with capital top-ups. Also, Goldman will act as a bridge for introducing clients to FTX. In addition, the will be direct trading of futures.
David Solomon, CEO of Goldman Sachs, and Sam Bankman-Fried of FTX have been in contact. They have discussed the potential of an IPO and to help FTX firm with regulations.
Goldman Sachs Collaborates With FTX For Derivatives Trading Option
A famous investment bank plans to integrate derivatives trading with a crypto exchange. Goldman Sachs is famous in the conventional financial market. It became the first US bank to offer crypto trading services in March.
FTX plans to handle services the same way as brokerage firms. As a result, it has partnered with the popular bank Goldman Sachs.
In addition, FTX is among the largest cryptocurrency derivatives exchange in the US. The crypto exchange plans to offer not only crypto but diverse financial products. As a result, it has been in contact with the CFTC and SEC.
Also, the exchange wants to take care of margin and collateral requirements. Brokerage firms like Goldman Sachs handle this function.
It is worthy to note that Goldman already has the license to act as FCM (Futures Commission Merchant). FTX believes an integrated model will help to improve market stability. Also, it helps to free up capital for brokerage firms.
FTX stated that the firm holds the client’s collateral. Also, it calculates margin requirements and liquidates positions immediately. These procedures help to handle massive trades and are helpful in a period of high volatility.
Regulators Against The Derivatives Proposal Of FTX
Some regulators are against the proposal of FTX to act as an FCM. One of such regulators is the CFTC (Commodity Futures Trading Commission).
The commission stated that the proposal of FTX must be accessed thoroughly. Also, the United States Congress is against the application. They believe it will threaten the brokerage sector. Therefore, the plans of Goldman Sachs are still subject to agreement from regulators.
Moreover, the FIA (Futures Industry Association) is also against the proposal of FTX. The agency claims that it could lead to market volatility and financial instability.