AAX, a Hong Kong-based cryptocurrency exchange using London Stock Exchange (LSE) matching engine technology, has been officially launched.
After 19 months of development and testing, the company announced on Thursday that the trading platform had been put online on the Web and mobile, and targeted retail and institutional investors offering peer-to-peer transactions. stock market, futures and over-the-counter.
Earlier, the LSE announced that AAX would be the first cryptographic market to use its Millennium Exchange matching engine, which also powers major stock markets such as London and the Hong Kong Stock Exchange.
In addition to crypto crypto spot trading, AAX expects the derivatives market to be a major component of its offering, with its offer of perpetual futures contracts settled in bitcoins. These contracts, with no expiry date, will be linked to the performance of five digital assets – bitcoin, ether, ripple, litecoin and EOS – with leverage up to 100 times greater.
AAX claims that with the LSE matching engine, it can settle futures transactions at an average speed of less than 0.0005 seconds. To put this into perspective, Binance is announcing a low latency payment of 0.005 seconds for all of its current and future products on Binance Futures.
"LSEG Technology is pleased 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 scalability, flexibility, reliability and direct and transparent access to the market, "said Ann Neidenbach, CIO of Technology LSEG Technology, in a statement.
Thor Chan, CEO of AAX, told CoinDesk that the company had started in March 2018 without raising funds from outside investors, using its own capital to support a team of 100 people, 60% of whom were developers.
The exchange will take a hybrid approach to retaining customers' digital assets, combining its own internal storage solution with third-party institutional repositories.
Bakkt in Asia?
Chan believes that the partnership with LSE will accelerate the process of integrating institutional clients, including the traditional financial sector, into AAX's cash and term services.
He added that working with the LSE will give AAX access to the network of exclusive trading partners of more than 300 major banks and financial institutions.
Michael Wong, COO of AAX, told CoinDesk:
"We are discussing with major institutions traditional markets and cryptography markets. … We currently have a number of live conversations with serious institutional clients. But unfortunately, I am not allowed to divulge names yet. "
Earlier this year, Intercontinental Exchange, the parent company of the New York Stock Exchange, launched Bakkt, a long-awaited market for institution-based physical settlement bitcoin futures. According to Mr. Chan, Bakk's tiered system, which requires registered brokers to act as middlemen, could be a barrier to expanding its customer base.
It's where he thinks that AAX has a benefit.
"It's different." Bakkt has physically delivered contracts, so they need a network of brokers to facilitate settlement – it's really a barrier for them to acquire users, "Chan said.
In terms of retail, AAX uses a strategy similar to that of exchanges such as Huobi or OKEx, allowing for over-the-counter trading between counterparts in the form of an immediate takeover ramp supporting the Chinese yuan, US dollars and Hong Kong dollars.
"For us, we do not provide any method of immediate deposit or withdrawal to users," Chan said. "We are not allowed to accept deposits or withdrawals in Mainland China. It does not conform to that. But if it's just a peer agreement, it's something that's allowed in mainland China. "
Warning on Futures
The launch of AAX comes just a day after the Hong Kong Securities and Futures Commission (SFC) issued a warning on exchanges offering cryptocurrency futures in Hong Kong.
Companies or people who offer crypto futures without a license or proper authorization may be considered to violate city regulations based on product structure, said the SFC, adding:
"Anyone who operates a platform that offers or trades" futures "must be licensed or authorized by the SFO, unless waived."
The SFC has not authorized or authorized any person in Hong Kong to offer crypto futures. Given the risks associated with this type of product, it would be "unlikely that you grant a license or authorization to carry on business in such contracts.
Current conditions of use of AAX stipulate that it will not offer services to users of different jurisdictions, including the United States, Venezuela, Iran, the United States, and the United States. 39, Iraq, North Korea or any other country sanctioned by the United States or the European Union, excluding users of Hong Kong. in the restriction list.
In response to the latest warning from the SFC, the company stated:
"We welcome the latest SFC guidance on virtual asset futures. We are now studying very closely whether any of the instruments we are proposing are subject to the directives of the SFC. AAX has always considered operating in regulated cryptocurrency markets that encourage innovation but also provide investor protection. We will take appropriate measures to comply with all applicable regulations in all markets in which we operate. "
Thor Chan image courtesy of AAX