Dutch crypto derivatives exchange Deribit launched a block trading solution in partnership with American trading communication platform Paradigm. The institutional block trading solution is reportedly the first one of its kind offered by a crypto-derivatives exchange. The new block trading solution intends to enable institutions to directly negotiate crypto-derivative trades via chat on Paradigm, while agreed information is automatically directed to Deribit for execution and clearing.
Block trades are privately negotiated transactions in futures or options, or spreads that exceed certain minimum quantity threshols, Once trades agree on a price these transactions are submitted to the exchange for execution and clearing. By Introducing hte new tool, Deribit an Paradigm want to eliminate any execution risk associated to order book when institutioal traders privately negotiate large trades via telegram or skype and then manually coordinate execution on Deribit.
John Jansen, co-founder and CEO of Deribit, pointed out that benefits for institutions are further emphasized when trading options. According to Jansen, options traders can now create a portfolio of put and call options in different variations and trade them by blocks, adding futures at the same time, instead of negotiating and trading options one at a time.
He stated, “The ability to negotiate deals privately and execute them automatically on Deribit platform but outside of the order book is a crucial step in onboarding institutional traders. You remove the risk of front running and offer institutions the ability to trade significant amounts without moving the markets and with a counterparty of their choosing.”