eToro, the cryptocurrency and multi-asset platform serving over 13 million users, unveiled improvements to eToroX, its crypto exchange, on July 23. The new features serve professional and institutiona
eToro, the cryptocurrency and multi-asset platform serving over 13 million users, unveiled improvements to eToroX, its crypto exchange, on July 23. The new features serve professional and institutional traders, a segment with distinct operational needs that retail platforms don't address.
eToroX rolled out a FIX API, cold storage for digital assets, new order types (FOK, IOC, GTC, GTD, Iceberg), a margin program, and a faster matching engine. The cold storage custody uses the same security measures found in traditional finance. The margin program allows participants to trade with ten times their account size on the spot market. eToroX pairs institutional clients with eToro staff members for personalized onboarding.
The FIX protocol coexists with REST and WebSocket APIs.
Aite Group, a research firm, found that professional crypto traders lack "institutional-grade tools." The exchange addressed this gap with a new approach to fees.
eToroX operates on an inverted fee schedule. Instead of charging traders who buy via market orders, the exchange pays them rebates. Traders who execute market orders above certain volumes receive these payments. The University of Melbourne examined a small group of traditional exchanges with inverted pricing and found the model benefits market participants. Their analysis showed inverted venues improved price discovery, boosted liquidity, and cut down on price swings over short timeframes.
eToro released a research document explaining the institutional barriers in crypto and the solutions eToroX offers.
Peggy Sullivan, Senior Policy Advisor to the U.S. Securities and Exchange Commission, said: "to have more mainstream adoption of the cryptocurrency or the digital asset space, we need to make it easier for the institutional markets to enter."
Yoni Assia, eToro's CEO, described the current market moment. "2020 is proving to be a significant year for institutional interest in crypto investing. The data is showing that institutions are buying the biggest cryptos by market cap such as bitcoin and ethereum, in a bid to position themselves ahead of the next bull run. Furthermore, due to the unique way in which this year is playing out, investors are seeking uncorrelated alternative investments, and cryptocurrency seems to be the ideal answer to this for many."
Doron Rosenblum, eToro's Vice President of Business Solutions, noted the disparity between crypto and traditional finance. "Institutional investors have not been able to enjoy a similar quality of trading tools in the crypto industry as those they rely on in traditional asset classes. We want to address these concerns directly, as outlined in our position paper, in a bid to open up the crypto ecosystem to both institutional participants as well as pro traders."
Rosenblum emphasized the round-the-clock nature of crypto markets. "Institutions are now much more aware how a 24×7 risk management mechanism allows the management of risks on a constant basis, which is only possible via the crypto ecosystem. We are seeing this in eToroX's data, where the most traded cryptoassets on our platform by institutional investors are stablecoins pegged to commodities and Fiat currencies. We have launched these initiatives today to give these types of traders access to deep order books at a competitive price."
eToro opened eToroX in 2019 as an on-chain trading venue. The company operates with the belief that blockchain will support trading of all investable assets in tokenized form.
