Goldman Sachs Establishes Cryptocurrency Trading Team, Has Successfully Traded Two Bitcoin-Related Derivatives

The bank is looking for “selective access” to cryptocurrency trading institutions to broaden its business scope.

Goldman Sachs Establishes Cryptocurrency Trading Team, Has Successfully Traded Two Bitcoin-Related Derivatives

Summary.

  • Goldman Sachs on Thursday informed its markets staff that a newly created cryptocurrency trading desk has successfully traded two bitcoin-related derivatives, according to an internal memo obtained exclusively by CNBC.
  • The cryptocurrency team, based in the firm’s global currency and emerging markets trading unit, reports to Rajesh Venkataramani, the Goldman partner who authored the memo.
  • Goldman Sachs said the bank is also looking to expand its market share and broaden its business by having “selective access” to cryptocurrency trading institutions. The firm also said it launched a new software platform this week to provide clients with the latest cryptocurrency prices and news.

New York-based Goldman Sachs has officially kicked off the era of cryptocurrency trading on Wall Street.

The bank informed its marketing staff Thursday that a newly formed cryptocurrency trading desk has successfully traded two bitcoin-related derivatives, according to an internal memo obtained exclusively by CNBC.

The crypto team, which exists in the firm’s global currency and emerging markets trading unit, reports to Rajesh Venkataramani, the Goldman partner who authored the memo, and is part of the bank’s overall digital assets business led by Mathew McDermott.

Goldman Sachs, a global investment bank that focuses on fixed income and equity trading, has been considering a bitcoin trading desk since at least 2017. Reuters reported earlier this year that the firm initially proposed those plans and restarted its crypto trading team in March. And Thursday’s memo proved the first official acknowledgement of Goldman Sachs’ involvement in cryptocurrency trading.

Goldman Sachs said it is trying to expand its market share through “selective access” to crypto-trading institutions to scale its business under the leadership of CEO David Solomon. The firm also said this week it launched a new software platform to provide clients with the latest cryptocurrency prices and news.

Banks including Goldman Sachs and its rival Morgan Stanley had announced plans to offer bitcoin exposure to wealthy clients in their wealth management units, but have tended to stay away from the volatile asset in their Wall Street trading operations. As CNBC previously reported, traders at a number of firms, including JPMorgan Chase, have been asking fund managers when they can start dealing in bitcoin.

The two derivatives that Goldman Sachs has successfully traded are bitcoin futures and a no principal delivery forward (NDF) service, both of which are ways to bet on the price of bitcoin. “), as Goldman does not currently have the capacity to do so.

The bank will use Cumberland DRW as its trading partner to hedge its exposure to the huge volatility of bitcoin by buying and selling bitcoin futures in CME Group block trades.

Max Minton, Head of Digital Assets, Asia Pacific, Goldman Sachs said, “Institutional demand continues to grow significantly in this space and being able to work with a partner like Cumberland will help us expand our product capabilities; the new offering paves the way for us to develop our nascent cash-settled cryptocurrency product capabilities. “

The following is the original memo.
May 6, 2021

Formation of Cryptocurrency Trading Team

I am pleased to announce the formation of the firm’s Cryptocurrency Trading Team, which will be our centralized counter for managing cryptocurrency risk for our clients. This cryptocurrency trading team will be part of the Global Currencies and Emerging Markets (GCEM) division and will report to me. The team is also an integral part of the Digital Assets effort under Mathew McDermott.

As part of the initial launch, we have successfully executed Bitcoin (BTC) NDFs and CME BTC futures trades, both cash settled. Going forward, as we continue to grow our market share, albeit in a measured manner, we will selectively access new liquidity providers to help us expand our business.

In addition, yesterday we launched our Digital Asset Dashboard to provide our clients with daily and intraday cryptocurrency market data and news. We would like you to highlight the dashboard to your clients. For more information on trade approvals and access, please contact the Digital Assets team.

Please note that the company cannot trade bitcoin or any cryptocurrency (including ethereum) on a physical basis.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/goldman-sachs-establishes-cryptocurrency-trading-team-has-successfully-traded-two-bitcoin-related-derivatives/
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