Given the path that crypto-currencies such as Bitcoin are on, the news that a trading platform which allows for blockchain-based derivatives should not be a surprise. However, CloseCross’s fintech platform has been given a MiFID II license, essentially giving it the EU stamp of approval.
The platform allows investors to enter multiparty derivative contracts with their predictions on global stock market indices, crypto, forex rates, commodities, stock prices and interest rates. It is now fully regulated under MIFID rules giving investors protection and transparency that the regulation was designed for.
CloseCross has offices in London and Malta. It developed and patented a multiparty derivatives trading platform, where traders can enter derivative contracts without the need of major banks issuing derivatives or having to take on leverage.
Rather than the usual counterparty model of derivative trading, the firm allows for traders not to take on leverage against a single party, it allows them to take on multiple parties and hence do not need leverage for potentially high returns. According to the firm it allows traders to gain potential returns without taking on any leverage whatsoever.
Investors will be able to forecast market movements on a wide range of asset classes in an interface that allows users to predict simple or complicated movements such as call/up, put/down, volatility or even stability.
Accuracy and timing are rewarded with relative better returns as proprietary algorithms are used for automated and transparent risk/reward distributions between the traders. Instead of relying on the dark pools of centralized derivative issuers, CloseCross utilizes the pooled funds from the traders themselves for the pay-outs on the derivative contracts.
However, charges apply if investors make a correct forecast, whereas those who get the forecast wrong lose the amount they have invested but are not charged any fees. There are no minimum investment levels for traders, which the firm claims makes the derivatives market more accessible.
Vaibhav Kadikar, founder and CEO of CloseCross said: “Being licensed under MIFID regulation is a major milestone in the development of CloseCross and a crucial part of our commitment to traders on keeping trading simple and transparent. This is the first time anyone has been able to marry the best of both worlds by giving traders a non-custodial derivatives solution while still complying with one of the highest regulatory regimes.”
