NEW:
@Ripple announced that global macro and digital asset manager Brevan Howard will use Ripple Prime for multi-asset prime brokerage, clearing and financing services across its funds, giving it access to traditional and crypto markets through a single prime broker.
@MikeHiggins, International CEO of Ripple Prime, on what clearing trades across markets through one prime broker means for a fund's margin:
"If you were buying Bitcoin on a Coinbase of the world and selling the future on the CME, you would have to post, say, $10M each leg - that's about $10M for Coinbase, and you've got about 25% margin on the CME, that's another $2.5M.
So to run a basis trade, long spot, short the derivative, will cost you margin of around $12.5M. If you did that through the prime broker who sees the risk as delta neutral, it's a fraction of that, about $1M to run that 10 by 10 trade.
The capital efficiency you get from netting at a prime broker allows markets to scale.
Investors are looking for greater returns and therefore forcing the hedge funds to trade more products. Without that capital efficiency, even if they performed well, they would pay most of that back in fees or in margin requirements."