COPPER
Balancing security and efficiency Interview with Alex Maslin
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doption and usage of digital assets is growing, however the market is still not fully saturated. This means some managers may look to trade on multiple exchanges to seize on opportunities resulting from slight price discrepancies between exchanges. Accessing all exchanges through a single platform can make these managers more operationally efficient while also safeguarding the assets to ensure high levels of security. Alex Maslin, Business Development Director, Custody and Prime Brokerage for Digital Assets at Copper outlines: “Managers have long complained about the difficulty of having to manage a variety of exchanges at the same time. Operating multiple exchange accounts can also be enormously capital intensive as managers are required to park assets on each platform so that there is capital to trade when an opportunity presents itself. “A core component of Copper’s infrastructure is Copper’s ClearLoop, a sophisticated inter-exchange trading and settlement network we rolled out last summer which is being described as a game-changer. As opposed to holding assets across various locations independently, ClearLoop enables clients to trade on multiple exchanges via a single platform, utilising one pot of assets held in a custodial trading account with Copper.” In addition to enhanced capital efficiency, the platform streamlines and secures the settlement process, allowing traders to maintain full control of their funds. “This is because their assets don’t leave their custodial trading account at Copper, effectively eliminating counterparty risk,” Maslin notes. Price discovery is the primary reason investors choose to trade on multiple exchanges. Some do this simply to access the best price when an asset needs to be traded, others 8
build a strategy around finding and capitalising on these small differences in price. High level of security When trading digital assets, security is paramount. Maslin comments: “A key challenge that many managers face is the balance between ensuring the security of assets while maintaining the speed and efficiency of their operations. “The transfer of assets between the custodian and exchange has historically been highly disjointed and cumbersome. This occurs because very few custodians offer connectivity to exchanges in a secure and convenient fashion. The challenge for managers has been to confidently assure investors that their assets are secure at all times during these movements across the blockchain.” Copper’s solutions can help managers mitigate these risks. The aforementioned ClearLoop is one which allows managers to trade across multiple venues while ensuring assets remain under Copper custody. The firm also provides a Walled Garden solution. “This enables clients to move assets interexchange, or directly from the client’s cold custody account into their exchange accounts, with all other withdrawal routes lockdown. So, assets can only go back and forth between predefined and approved destinations, effectively eradicating the risk of misappropriation of assets,” Maslin explains. This balance between security and operational convenience is one of the most significant challenges managers trading digital assets must overcome. Maslin remarks: “We can all agree that digital assets are fast-moving assets, so minutes matter, and hours cripple a trading strategy. Historically, moving assets from cold storage to a trading environment would take up to a staggering 12 hours, due to the DIGITAL ASSETS IN FOCUS | Mar 2021
