Standard Chartered announced it trialed prime brokerage credit transactions supporting digital asset trades for spot bitcoin and ether, via an integration with LMAX’s trading infrastructure. It is one of the first global systemically important banks (G-SIBs) to execute such trades.
Under the model for the pilot, Standard Chartered’s prime brokerage unit provided credit intermediation between counterparties trading on LMAX Digital. Trade settlement runs on a T+1 basis through the bank’s UK branch, while the underlying digital assets are held through its custody platform in Dubai’s DIFC. The arrangement splits the workflow across jurisdictions, with the credit and settlement functions sitting under Bank of England PRA supervision and the custody infrastructure in a jurisdiction where the bank already has established digital asset operations.
While Basel Committee rules for cryptocurrencies appear prohibitive with a 1250% risk weighting, hedging is supported but only partially offsets the exposure. The high returns on crypto prime brokerage may more than compensate for the higher capital requirements under the Basel rules. Those elevated returns reflect the scarcity of institutional credit counterparties, as LMAX’s CEO noted.
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