Blockchain Platform Eliminates Brokers in Derivatives Trading

A new derivatives trading platform will utilize blockchain technology to eliminate the need of brokers.

A new blockchain-powered derivatives platform is disrupting the derivatives trading market as it eliminates the need for brokers and brokerage platforms to bring about a peer-to-peer (P2P) trading platform.

Launched in cooperation with Thomson Reuters, Level 01 Technologies recently rolled out Level01 Derivatives Exchange in Hong Kong, which it claims, offers a transparent and unbiased environment to trade derivatives contracts, the company said.

Jonathan Loi, Level 01 CEO commented:

"Thomson Reuters is a respected industry leader in providing intelligent information and data, with trust principles aligned with our vision. Our collaboration with Thomson Reuters ensures we have the necessary quality data for Level 01 algorithms to perform most efficiently."

Under the deal, Level 01 will use data feeds from Thomson Reuters as the primary source for its artificial intelligence (AI) deep learning algorithms to enable the platform to provide real-time pricing analysis on derivative contracts. The data could also be utilized to guarantee the reasonable, transparent, and precise settlement of derivative contracts once the contract matures.

Loi explained his platform is equipped with a system of smart contracts that also perform as a preset, impartial and reliable intermediary for transaction and trade settlements. The system is capable of bypassing the need for brokerage platforms with human weakness that expose market participants to risks of collusion, negligence and in some occasions, scams.

He said in an article posted on the firm’s website:

“We believe bypassing brokerage platforms which have various disadvantages to the traders (such as price manipulation, non-standard hidden costs, and centralization of authority over assets) will affect the industry in a big way due to traders receiving full benefits for their investments and speculations. The Level 01 team is composed of very experienced professionals in their respective fields, even garnering the full support and partnership from big industry players like Thomson Reuters.”

He added the most significant challenge faced by the industry now is the mass adoption of the technological solutions offered by blockchain but he expressed confidence with the benefits the technology brings to users, the public would soon embrace it.

Early this month, Morgan Stanley announced plans to offer a Bitcoin-based financial instrument that allows derivatives contracts to attract demand from institutional clients as well as raise internal approval processes. The BTC swap trading is expected to be launched once institutional investors show signs of interest in the product and after completing an internal approval process.