The digital asset exchange, OKX, has pioneered a novel feature, “Nitro Spreads,” aimed at providing institutional investors with a simplified mechanism for executing basis trades, thus enhancing their navigation within the volatile crypto market.

With the rapidly fluctuating cryptocurrency market, exchanges strive to evolve and stay relevant under all market situations. They recognize the necessity to accommodate institutional investors, who require innovative tools and solutions that align with their growing demands.

One of the predominant strategies employed by institutional traders is basis trading, which involves exploiting the price disparities between an asset across diverse markets, like spot and futures.

Reacting to the needs of the trading community, OKX has introduced a one-click product for institutional users to execute basis trades.

Lennix Lai, the Global Chief Commercial Officer at OKX, in an interview, elaborates on the challenges faced by institutional traders when transacting cryptocurrencies and how OKX has been evolving its offerings for this user segment with products such as Nitro Spreads.

Cointelegraph: What are the current challenges for institutional traders?

Lennix Lai: Institutional traders seek to amplify capital efficiency, limit third-party risks, partner with trustworthy custodians, and circumvent price slippage while trading effectively. In convoluted market situations, these traders require strategies yielding substantial returns with minimal risk.

Q: How are crypto exchanges tackling these challenges?

LL: We, as a crypto exchange, listen to our institutional users to innovate ways to cater to their needs. This can take the form of collaborations or the products we develop, such as our new feature, Nitro Spreads, created specifically for basis trading strategies and dedicated order book liquidity.

Sophisticated crypto traders excel not just in market analysis but also in assessing crypto exchanges. Our suite of institutional products is in constant evolution to anticipate user needs and offer unique features that the market hasn’t yet seen.

CT: Can you clarify the concept of basis trading?

LL: Basis trading refers to a strategy that capitalizes on the price disparity of an asset between two different markets, such as spot and futures. This strategy generally involves managing both legs of the trade simultaneously, which can be complex. OKX’s Nitro Spreads automates this multifaceted trade in one click, leveraging our platform’s superior liquidity and low latency for maximum user benefit.

CT: What basis trading strategies can institutional traders execute with OKX’s new Nitro Spreads product?

LL: Institutional traders can implement popular delta one spread strategies, such as calendar spreads, future rolls, and funding rate farming, all in an order book format.

CT: How do Nitro Spreads simplify the process of basis trading for traders?

LL: Traditionally, spread trading necessitates traders to manually execute trades across two separate order books, introducing leg risk. However, with Nitro Spreads on Liquid Marketplace, traders can execute spread trades in one click, ensuring “atomic” execution. This automation reduces leg risk and optimizes the platform’s high liquidity and low latency.

CT: Are there any specific requirements for traders to access Nitro Spreads?

LL: Currently, OKX’s Liquid Marketplace and Nitro Spreads are accessible only to pre-approved institutional traders. To gain access, traders are required to submit our application form.

CT: What risk management features are integrated into Nitro Spreads to safeguard traders?

LL: In “atomic execution,” both legs of the trade are executed simultaneously as a single unit. This guarantees the traded quantities for each leg match or else the trade is not settled. This strategy helps alleviate risks associated with price slippage and leg-in risk that can transpire when legs are executed separately.

CT: What trends are visible for institutional participation in the cryptocurrency market?

LL: Despite the challenging conditions brought on by FTX’s collapse and the market downturn, institutional participation in the crypto market has remained steadfast. To maintain a lasting presence in the crypto sphere, a firm must weather all market conditions. Many institutional firms are readying for the cycles ahead by refining their trading strategies and identifying trading venues that prioritize their needs.

At OKX, we’re using this period to enhance our institutional offering by augmenting our trading capabilities and spearheading product innovation, as evidenced by our recent partnership with Komainu Connect. We keep our fingers on the pulse of changing trader needs by staying connected with the trading community, with many of those involved in product development at OKX also hailing from a trading background.