Q2 Update: In the middle of difficulty lies opportunity

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July 18, 2022

It has been a volatile first half of 2022, with Q2 kicking it up a notch, and it seems even the summer heat isn't able to deter this rising crypto winter. As crypto prices whipsaw, the state of the market has left many of us full of questions and uncertainties.

While we at B2C2 don’t have all the answers, here is something we do know: we are prepared to weather the storm, regardless of how harsh or long it proves to be. B2C2 has been through crypto winters before - from 2015 to 2018 - and we continue to fill in the liquidity gaps that have been left by the market disruption. As we navigate this market, we remain cautiously optimistic, prioritising continuity of pricing, execution and settlement, to ensure we are always there when our clients need us. Our 12-month trade count shows we are there through thick and thin.


All the while, we continue to innovate and improve our technology, systems and products. Take a look at what we’ve been working on this past quarter.

Trading firm B2C2 looks to thrive, not just survive, amid crypto winter

“It’s an all-hands-on-deck moment for the company: checking our systems and how our clients are performing. This is our third 'crypto winter' and companies like ours tend to outperform in periods of market stress." - Edmond Goh, Head of Trading

See how B2C2 has been handling the crypto winter and what our plans are to continue innovating and expanding our derivatives offering.

Read Here >>>

We won FX Markets’ Award for Best LP for crypto derivatives

"As the first single-dealer platform in crypto, B2C2 is now one of the largest liquidity providers in this fast‑evolving space."

Check out FX Markets’ interview with Johannes Woolard, Head of Options, Europe, about the growth in over-the-counter (OTC) trading and how B2C2 enables institutional participation via OTC crypto derivatives.

Read Here >>>

Dual Digital Asset Instrument (DDAI)

B2C2 launched an innovative yield enhancement product, the dual digital asset instrument (DDAI), offering counterparties defi-like yields in a regulated cefi environment.The DDAI structured product is designed to enhance yields and provide a higher than normal return in exchange for any capital appreciation. The product diversifies a client’s revenue streams to create a return, even in uncertain market conditions. Importantly, the DDAI can be used by counterparties to white label a product for their own clients.Where available, DDAIs are designed to meet the needs of brokers, banks, asset managers, insurance companies, wealth managers and family offices across select regions.

New Coins Added!

This quarter, we’ve added Compound (COMP) and Dai (DAI) coins to our OTC offering for trading. Contact your sales representative to get them added to your account.

Spot, NDFs, and CFDs

As a leading crypto liquidity provider serving aggregators, banks, exchanges, family offices, investment managers, OTC desks and retail brokers globally, we are uniquely positioned to see all the different flows making up the global crypto market. This enables us to remain informed about our industry and the many opportunities being created.

Crypto markets remained volatile during Q2 after the failure of an algorithmic stablecoin led to concerns about contagion and a pull-back in risk taking. This hit some big lenders hard, especially those who prioritised P&L growth ahead of sound risk management by extending uncollateralised or undercollateralised loans to participants pursuing aggressive, high risk trading strategies. Dealing with these credit risks is essential for growth to return.

This is B2C2’s third ‘crypto winter’ and our continued liquidity provision across market conditions has bolstered our reputation as counterparty of choice amongst our global clients. Our success is founded on robust risk management combined with a market-neutral trading strategy, enabling us to navigate the current challenging market conditions in order to provide the reliable liquidity our clients depend on. We also continue to build out our teams, including Jennifer Elvidge who joined our trading team in May and has eight years of NDF trading under her belt.

Funding - For our EMEA and APAC clients

We released a new loan type, Open Terms, which allows B2C2 and our clients to terminate the loan at any time. We also added customisable interest payment frequencies for all loan types. Client interest for both additions has been strong with > $100m+ in trading volumes crossed very shortly after launch.

This quarter we increased our default collateral requirements for new client borrows from 120% to 140%, as general funding and credit conditions worsened following high-profile protocol collapses and institutional liquidity crises.

Options

B2C2 is shortly launching an options chain for institutional clients with zero fees, flexible collateral treatment, and streaming prices in 50 BTC (ETH equivalent) tradeable by price or implied vol.

We recognise the recent dislocation in the market and the need to have an arsenal of tools available to trade and hedge your portfolio. To that end, the options chain – in conjunction with our new RFQ service for ADA, SOL, BTC and ETH – will ensure clients have ease of access to options pricing in addition to a customised solution to meet their needs. Be on the lookout for further information!

In a recent interview in FX Markets following B2C2 winning the award for ‘Best liquidity provider for crypto derivatives’, Johannes Woolard, Head of Options, EMEA, had this to say about the development of B2C2’s OTC offering: “This has led to a tripling of our derivatives volumes over the past 12 months, particularly after B2C2 introduced options and non-deliverable forwards in the latter part of 2021.” As a result, we have further expanded the global options team, with Aakash Desai joining the London options team on April 1st, with a background in options trading at a proprietary trading firm. Looking ahead, B2C2 remains convinced that OTC will continue to grow and that OTC options will be a significant part of that growth as they offer the tailored exposure and minimal market impact that institutional clients want.

Tech

There has been consistent focus this quarter on resilience and platform stability improvements. We will soon rollout a new v2 tech stack that will massively reduce rate limiting, minimise execution latencies, enable regional execution hubs, and allow us to offer near-zero reject rates as well as functionality to support trading in the counter currency. These improvements cement our position as the leading OTC platform in crypto, to competing within the realm of traditional FX in terms of throughput, latency, fill rates, and functionality.

In this quarter's Employee Spotlight, we introduce Zoey Peterson, Operations Analyst turned Account Manager. Zoey went to university in the States and then moved to Tokyo as an admissions counsellor and SAT tutor for international school students in Japan and has since joined B2C2 in the Japan Office.

Find out what it's been like to jump into crypto from an entirely different field and what her day-to-day looks like at B2C2.

Read here >>>

ICYMI

Take a look at a few of our favorite events, webinars, and podcasts from the past quarter and watch the recordings if you missed them!

• Nicola White at the ISDA AGM on the "Crypto in Wholesale Markets" panel. Rewatch the panel here and check out our thoughts on crypto derivatves here

• Nicola White on the Leaders Panel at The FT Digital Asset Summit. Rewatch the panel here

• Max Boonen on the "Investing in clearing and settlement: contrasting strategies" Panel at The FT Digital Asset Summit. Rewatch the panel here

• Rob Catalanello on the "What does the future hold for crypto market structure?" Panel at The FT Digital Asset Summit. Rewatch the panel here

• Phil Gillespie on Forkast's "Word on the Block: Mind the gap: Bridging the divide between DeFi and CeFi to grow yield." Watch the pocast here

• Edmond Goh on a Coindesk webinar: "CeFi/DeFi: the trading opportunities that arise from their different market structures." Watch the webinar here

Upcoming Events

We hope you are taking the summer to rest because B2C2 will be making a big splash at events in September. Make sure you pencil some in and come say hi!

• July 20, NYC: "Women in Crypto" Event, co-sponsored with Women in Derivatives (WIND)

• July 21-22, Virtual: Redefine Tomorrow

• September 13, NYC: DAS NYC

• September 21, Vienna: EuroFinance International Treasury Management

• September 27, Amsterdam: TradeTechFX Europe

• September 28, Singapore: Token2049 Singapore

While we recognise B2C2's core offering does not include defi products, we do think anyone engaging in the crypto market should be aware of all the events and essential infrastructure of blockchain ecosystems, including defi, and how it affects the market as a whole. We therefore wanted to share some of our insights on how technological advances on the blockchain could influence the flourishing of crypto capital markets.

In our first installment of defi opinions, we talk about Layer-2 solutions for blockchain, which are delivering efficiency ‘wins’, leading to new opportunities across the wider crypto community.

Read here >>>

  • B2C2 named "Most popular OTC counterparty" by PWC Read Now
  • Crypto market-maker B2C2 weighs US swap dealer registration Read Now
  • What it's really like to work in crypto market making Read Now
  • Nicola White has been named CEO of B2C2’s US entity Read Now
  • The future of crypto trading is futures Read Now
  • Luna crash sends a chill through decentralised finance market Read Now
  • Bitcoin Falls Back Below $30,000 as Range-Bound Trading Persists Read Now
  • Bitcoin holds near $20,000 as investors fear "domino effect" Read Now

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IMPORTANT INFORMATION

This article is solely for discussion/information purposes only and does not constitute an offer or firm commitment of any kind to provide any investment opportunity, product or return.

Investments involve risk, and this document does not purport to identify all (if any) of the risk factors associated with any exposure to the proposed product or instruments, assets, or currencies referenced therein. There is no guarantee of any returns or yields. The value of investments may fall as well as rise and any investment may result in loss which may be significant.

Porducts are available for investors who are either professional, accredited or sophisticated investors, and any such investor will be investing on the basis of its own assessment of its financial ability and willingness to accept the risks inherent in the product or instruments, assets or currencies referenced therein. The product is not available for retail investors.

No representation, warranty, assurance or undertaking (express or implied) is given (and can therefore not be relied upon as such), and no responsibility or liability is or will be accepted by B2C2 Ltd or any of its affiliates or any of its or their respective officers, employees or agents as to the adequacy, accuracy, completeness or reasonableness of the information, statements and opinions expressed in this document.

About B2C2

B2C2 is a digital asset pioneer building the ecosystem of the future.

The firm has unlocked institutional access to crypto by providing reliable liquidity across market conditions. B2C2’s success is built on crypto native technology and continuous product innovation, making it the partner of choice for diverse institutions globally.

Founded in 2015 and majority owned by Japanese financial group, SBI, B2C2 Ltd is headquartered in the UK, with offices in the US and Japan. B2C2 Ltd is registered in England and Wales under company number 07995888 with its registered office at 86-90 Paul Street, London, EC2A 4NE.  B2C2 Ltd is the parent company of the B2C2 group of companies. Products may be provided by different members of the B2C2 group of companies, depending on the jurisdiction of the client and the regulatory status of the product and/or B2C2 group member. B2C2 is a registered trademark.

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