Hong Kong-based AAX Launches Cryptocurrency Exchange Using London Stock Exchange’s Engine
AAX, a Hong-Kong based cryptocurrency exchange has officially launched after 19 months of development and testing. The newly launched crypto trading platform will use the London Stock Exchange (LSE)’s computational engine to power the platform.
The trading platform will be available for mobile and web users on November 7th. The newly launched platform would offer several trading services which include spot, futures and over-the-counter (OTC) peer-to-peer (P2P) trading. The platform is aimed at retail and institutional investors.
AAX would be focusing on capturing not just the crypto-to-crypto spot trading market but also the derivatives market as well, which has gained huge popularity in the last year. The platform would offer futures perpetual contracts settled in Bitcoin. These perpetual futures contracts would have no expiry date and its value would be derived from bitcoin, ether, ripple, litecoin, and EOS with 100x leverage.
AAX claimed that the use of LSE's would give them an unprecedented advantage as they can settle futures contracts at an average speed of fewer than 0.0005 seconds. The speed is faster than any other platform currently offers. For comparison Binance settled these futures contracts on an average time of 0.005 seconds, making AAX at least 10x faster.
Ann Neidenbach, LSEG Technology’s CIO said,
“LSEG Technology is delighted to have successfully deployed our world-class matching engine capabilities at AAX. This is the first time that Millennium Exchange has been deployed in the cloud, bringing its, scalability, flexibility, reliability and seamless direct market access to AAX,”
Thor Chan, CEO of AAX, said that they will be taking a hybrid approach toward safeguarding user's assets where they will hold a certain portion of the user fund in their in-house storage and also keep a few portions of the fund with third-parties.
Chan believes the partnership with LSE would help the exchange attract institutional interest as well as give them access to LSE's partner network of over 300 major banks and financial institutions.
AAX Following on the Bakkt Footsteps
AAX partnership with LSE is quite similar to the Bakkt which was launched in the association of Intercontinental Exchange, the parent company of the New York Stock Exchange. Both the crypto centered platforms can profit from the stock exchange's reach. However, AAX COO Michael Wong believed Bakkt's tiered system which uses registered brokers as middleman could prove to be a hindrance in widening their client base.
Wong believed AAX can take advantage on that front and explained how, he said,
“It’s different. Bakkt has physically delivered contracts. So they need to have a broker network to help do the settlement. It’s actually a barrier for them to acquire users,”
Talking about the client accusations and garnering institutional interest he said,
“We are in the progress of discussions with major institutions both from traditional markets and crypto markets as well. … We have a number of live conversations going on with serious institutional clients right now. But unfortunately, I’m not allowed to disclose any names at this point. “
Hong Kong Securities and Futures Commission (SFC) Releases Warning for Futures platform
AAX platform launch comes just a day after the Hong Kong Securities and Futures Commission (SFC) issued a warning against futures trading platforms that are operating in the state without the necessary regulatory license. The SFC warning read,
“Any person who operates a platform that offers or trades ‘futures contracts’ is required to be licensed or authorized under the SFO unless an exemption applies.”
Responding to the warning by the SFC the AAX released a statement stating,
“We welcome the SFC’s latest guidance on virtual asset futures contracts. We are now studying very closely whether any of the instruments we offer fall under the SFC’s guidance. AAX has always envisaged operating in regulated markets for cryptocurrencies that encourage innovation but that also provide investor protection and we will take appropriate steps to ensure we are operating within all applicable regulations in all the markets where we are active.”