Digital currency exchange Gemini has announced that it will be launching its Gemini Block Trading for bitcoin and ether this week.
Block trading, also known as a block order, is an order or trade submitted for the sale or purchase of a large number of securities. This involves a large number of equities or bonds that are traded at an arranged price between two parties involved. This is a common approach that is often taken by hedge funds and institutional investors within the stock market who want to avoid differing prices in the open market.
Now, in a blog post from the exchange, which is run by Cameron and Tyler Winklevoss, it said that customers will be able to buy and sell large quantities of digital assets outside of Gemini’s order books, creating an additional mechanism to source liquidity when trading in greater size.
Due to go live at 9:30 a.m. ET on Thursday 12 April, the Gemini Block Trading service will electronically broadcast block orders to participating market makers simultaneously, ensuring best execution and price discovery for those taking part in the program, the exchange said.
Block orders do not interact with our continuous or auction order books. Trade information will be published via our market data feeds ten minutes following the execution of a block trade, Gemini added.
According to the blog post, a customer can place a block order that specifies buy or sell, quantity, minimum required fill quantity, and a price limit, or Indication of Interest. It goes on to add that a market maker will only receive quantity, minimum quantity, and the collar price; they don’t receive any other information related to the block order.
If a market maker agrees to ‘make a market’ that satisfies the Indication of Interest, the block order will be filled, it adds.
Block trading services are already making themselves known around the world as markets meet the demand from institutional buyers and hedge funds, and function similarly to over-the-counter (OTC) digital currency trades. According to a report from Reuters, the OTC cryptocurrency market is flourishing with Goldman Sachs-backed bitcoin payments firm Circle handling up to $4 billion in OTC trades every month over the past 12 months.
With the Gemini Block Trading service adding itself to the market it now means that market makers or investors don’t have to run the risk of trading outside an exchange when they use order book trading. It could also mean that it will eat into other businesses offering these services due to the fact that it has established itself as a trustworthy and regulation-compliant digital currency exchange.
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