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IG's plans for cryptocurrency in the near future. Futures, new coins and maybe some new crosses...


JamesIG

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Hi all - I wanted to update everyone on how their feedback regarding our cryptocurrency offering was having a positive impact on business decisions. Before I go over this I just wanted to briefly re-iterate a couple of things relating to unlongable / unborrowable trade rejections. If you would like a more in depth explanation check both this post, and this post.

 

As I have stated numerous times in the past there is no benefit what-so-ever in us rejecting trades as we know it's incredibly frustrating, but also provides no spread, commission, or overnight funding which is how we as a business generate revenue. Rejections have nothing to do with IG's dealing desk speculation on future market movements, but rather are due to the internal limits and associated risks in holding cryptocurrencies. 

 

We were one of the the first providers to start offering bitcoin a few years ago but the meteoric rise in 2017 has really given it prominence and client request led us to add Ether. We originally received a number of queries regarding educational material and an in depth overview of our offering. The mega thread was written on Community, whilst a comparison table was created to give full transparency of IG's costs. We also increased the number of IGTV videos we have, organised interviews with CEO's of blockchain specialist companies such as kryptonite1 and Coinsillium, and wrote a bitcoin PDF (scroll down) for new clients. We have hosted a number of webinars and plan on bringing out an Academy course soon, as well as adding a specific virtual currency section to the News area on the new platform and Coindesk to the Twitter feed.

 

In the past clients have requested reduced minimum bet sizes, and competitive spreads, and more tradable hours over the weekend, all of which we looked into implementing. This last point alone has significant implications and is far more complicated than just putting additional staff on. There are knock on effects to weekend maintenance of servers, some OTC brokers who we hedge through aren't open, risk parameters need to be re-evaluated, and we need to make sure our global offices are there to provide support, trading capabilities, technical back end support and incident management for our core dealing. 

 

Going forward

 

When it comes to new cryptocurrencies: Although it would be relatively easy to add a new cryptocurrency price feed, we need to make sure that the offering we create can work for 150,000 clients who may all overwhelmingly want to deal in one direction. There is significant due diligence which needs to be done to make sure clients can always exit their leverage positions easily and quickly, that their positions are safe, and that there aren't any systemic risks. There is also no point in simply adding a new currency if you are going to be rejected because of the limits imposed on ether and bitcoin. With that said we feel we are at a point where we can add Ripple and Litecoin to the IG dealing platform. We shall be doing this shortly however I can't give a guaranteed date as it's dependent on a couple of other factors. 

 

When it comes to unlongable / unborrowable: The introduction by the CBOE and CME for bitcoin futures is significant, not only as a keystone in the underlying cryptocurrencies history, but also the potential it provides in perfecting IG's offering. The head of our cryptocurrency deak, our risk team, and those involved with setting up new futures are all seriously looking into the opportunity which this will provide. If this is successfully implemented we hope this will provide advantages to hedging your trades, and overcome the restrictions we have on the unlongable / unborrowable. Once again I can't provide a concrete time frame on this because the CBOE haven't even traded for a week, and the CME haven't even listed yet.

 

When it comes to crypto crosses: A true crypto cross will be when bitcoin, for example, is quoted against ether. You would therefore trade BTC/ETH, ETH/BCH, BTC/BCH for example. Currently you are able to replicate this very easily by buying one crypto and selling the other, however this new offering should wrap it all into one simple trade. After an analysis of historical clients trades there aren't many who execute like this so it hasn't been a priority, however we are still looking at it based on a few client requests. This would also allow for crypto trading on the different ratios between pairs which should, in theory, internalize more flow and reduce the likelihood of unlongable / unborrowable. 

 

At the moment the above is subject to change however they are currently on the road map to review.

Thanks all

Any questions - fire away.

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Guest fmradio05

BTC/ETH pairs for Alts (any other coins other then BTC) through time its very difficult to find a BTC pair that increase over time. One example of ETH in June it was 0.14x and now it is 0.04x in BTC pairs, given, the USD value rose from $300 to $800, unless you can catch those pairs that rises like 20% over a few hours, it is time to take profits, on the long run the btc actually rises more in terms of USD. I think pure hedging on BTC/ETH/BCH on USD value is better, but I am hoping for this unlongable thing to go away soon!

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