Peer-to-peer trading has long been a goal of the blockchain community, especially when it comes to the trade of stocks and cryptocurrency assets. Under a P2P trading platform, it would be possible for the cryptocurrency community to conduct trades without the need for intervention from any central authority or regulator inside of the exchange. Over time, the development of this idea actualized in the form of decentralized exchanges. But even on these exchanges, the trade of traditional stock derivatives without the use of a broker has not been the norm.
But according to executives at Hong Kong-based Level01 Derivatives Exchange, their platform is going to allow participants to trade derivatives contracts without the need for intervention of any third-party broker. The company claims that this new system will allow for the trade of derivatives without any kind of bias in an environment of ultimate transparency.
CEO Jonathan Loi outlined his belief in the efficiency of the system in an official comment, remarking that developer Thomson Reuters is an “industry leader” whose penchant for information technology promises that the “Level 01 algorithms” will be able to “perform most efficiently.”
Thomson Reuters will be the backbone of the information side of the platform, providing key information on the data regarding prices and reasonable settlement statistics. Loi outlined that the platform relies on a complex combination of sophisticated smart contracts that automatically settle transactions without the use of any outside action.
Disrupting Brokerage Platforms
A key aspect of the Level 01 team’s project is the disruption of existing brokerage platforms in the status quo. The firm posted an article on their website explaining that their platform helps to bypass the existing structure of brokerage platforms. According to the writer of this article, side-stepping this traditional setup is incredibly important for the financial community. It could help traders to avoid “hidden costs and centralization,” as well as serve as a potential solution to price manipulation and similarly flawed financial practices.
But the work is not done, yet. The article concluded by saying that the industry still has several challenges to overcome. For the most part, the mass adoption of decentralized blockchain technology in the financial sector is a nearly insurmountable obstacle to the overall success of the new tech as it continues on its path to development.
This announcement could not have come at a more momentous time in the blockchain and financial sectors. Earlier in September, Morgan Stanley excited the crypto markets when the Wall Street giant announced that it would begin offering a new system for Bitcoin derivative purchasing for institutional investors. But for the average retail investors, such a system is not yet in place. Apparently, Morgan Stanley is waiting until they see some interest from more institutional players before they officially launch the new platform for derivatives contracts.
The creation of a truly decentralized, P2P exchange could send shockwaves through the financial markets, disrupting a system that has been in place for hundreds of years. For some traders, the work being done by Level 01 could mean the end of shady practices, manipulation of stock prices, and hidden fees for transactions.