Ripple brings Wall Street into 24/7 stock bets, but HSBC warns markets are still thin
Ripple Prime has launched a service enabling clients to trade swaps tied to over 100 markets, including stocks and commodities, 24/7 using perpetual futures on crypto derivatives exchanges. However, HSBC warns that market depth is still thin compared to traditional finance, posing risks as demonstrated by recent rapid liquidations.
Why it matters
This development bridges traditional finance with crypto markets, offering new avenues for continuous trading and risk management, but also highlights the nascent nature and liquidity challenges of these emerging markets, which could lead to significant volatility and losses for investors.
Daragh Maher, head of digital assets research at HSBC, called the launch an “evolutionary, not revolutionary” step in a note to clients on Monday, a copy of which was shared with CoinDesk.
“This is a rapidly growing market but not a very big one when compared to the Trad Fi markets they are tracking,” Maher wrote. “The stronger case for the product comes once there is sufficient depth for investors to express views and adjust risk when conventional markets are closed.”
Ripple Prime, the brokerage formerly known as Hidden Road, now lets clients trade swaps tied to more than 100 markets, including shares, commodities and currencies. A swap is a contract that pays out according to price movements, letting a client take a position without buying the underlying asset. Trading firm Virtu is already using the service, Ripple said in its Oct. 15 announcement.
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