FTX, a cryptocurrency exchange organization, is introducing FTX Equities, a stock trading platform that will allow clients to trade cryptos alongside stocks.
The launching is part of its goal to provide investors and customers with full access to a conventional market with a fully-integrated stock-trading platform where crypto can be used to buy stocks.
In a statement, the FTX U.S president said that with the introduction of FTX Stocks, the company is looking to create a platform that allows retail investors to trade crypto, NFTs, and ordinary stock offerings all in one place.
He went on to say that FTX will first open the new service for a small group of U.S. clients picked from the companies a waitlist. It will later roll out the platform before the end of the year. The president also said that the available ETFs and stocks will be open for transactions using the companies trading app.
This launching also comes after FTX made a spring investment in IEX, another stock exchange platform based in New York. The announcement also comes a week after Sam Bankman-Fried, its co-founder, purchased a minority stake in Robinhood, which has already allowed crypto trading alongside stock trading through its app. This action made him the third-largest shareholder. This action led to speculations that he wanted to buy the entire company. Shares of Robinhood, which began in stock trading and has seen strong customer demand for cryptocurrency, have been falling and last week hit an all-time low, roughly 77% below its July 2021 IPO price. This week, Robinhood announced its own larger crypto push.
The Trading Process
FTX stated it would offer the securities trading service through FTX Capital Markets, its broker-dealer, in collaboration with Embed Clearing, a “white-label” brokerage service provider to brokers. FTX’s push into stocks comes as it seeks authorization from the Commodity Futures Trading Commission—a U.S. derivatives regulator. The aim is to introduce automated risk management to the business of the leveraged future, which involves computers doing responsibilities previously performed by brokers.
Like the majority of brokerage firms online, a trader can trade commission-free. Users are also not left behind as there won’t be charges for brokerage accounts or minimum balance requirements. FTX customers will also be able to use Circle’s USDC and any other stablecoins as long as they are backed with Fiat to add funds into their trading accounts.
In the beginning, FTX will route all transactions via Nasdaq. It will, however, not receive payment for order flow, a feature plagues with controversy. This practice involves transmitting customer transactions to fast trader in exchange for cash.
FTX will be using a different approach to most other stock trading sites. Many other stock trading application relies on fees for market data. While it seems like a simple approach the company found itself under the scrutiny of Securities and Exchange Commission during a meme mania stock trading spree involving the notorious video game retailer, GameStop.
FTX is expected to make further announcements regarding the launch. Market analysts, investors, and Crypto Lists are eager and will be watching how the launch will affect the FTX. Towards the end of 2021, FTX crypto exchange market share rose to 4.5%, and its trading volume grew 500% and has seen significant events so far.
FTX U.S. joins Fintech brands, namely SoFi, Public, and Block’s Cash App, in offering crypto and stock trading. This is unlike other major rivals such as Binance and Coinbase. Binance even discontinued its share product last year.