Fundamental Interactions has launched its proprietary automated-hedging platform designed to jump start liquidity within a new exchange. It allows an automated market maker to refactor quote feeds from an active external exchange in order to supply continuous order liquidity to the internal market book. VL Financial Velocity Ledger Ltd, currently in the process of attaining a digital asset license, will use the service in Bermuda.
The service has two legs (auto-quoting and auto-hedging) each performed from the principal account of a market maker to the exchange. The auto-quoting process converts bid-ask quotes from external exchange market data feeds into orders to create liquidity. The auto-hedger leg of the process is a dynamic hedging and routing system that optimally liquidates positions resulting from the auto-quoting process.
“The ability to generate instant liquidity in Bermuda for digital asset tokens that are actively trading in other markets is an important avenue,” says Julian Jacobson, President and Chief Operating Officer of Fundamental Interactions Inc.
The liquidity platform is broadly compatible with any asset class but is primarily focused on tokenized assets and can be implemented as a plug and play liquidity service within FI’s virtual and nano exchange platforms, or it can be deployed as a stand-alone backend process for a market maker to intermediate between venues via FIX or Native API’s. The hedging process can be administered by an HTML5 interface that displays position views with P&L, slippage and risk management functions.