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November 10, 2020

In Conversation With

Why institutions remain in the homework phase for crypto with Skew

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Skew, which provides data analytics and trade execution services for cryptocurrency markets, came on the scene in 2018. The London-based company is a team of 16 led by co-founder and CEO Emmanuel Goh, a former JPMorgan trader who joined Teana Baker-Taylor for a discussion about the company and institutional investor appetite for crypto.

(14:05) “We are late movers to crypto. I really looked at it in 2017 when we had the big boom…I think a lot of the talks, especially at the end of 2017 were about institutions entering the space, which was primarily dominated by retail initially. And I think we are part of the trend. So I worked all of my career really on the institutional side, servicing very large institutional clients when I was at JP. My co-founder was doing the same at Citigroup…I think we really have that in our DNA and I think it shows in our product in terms of we are really kind of targeting those clients that we used to serve on the banking side.”

A recent Fidelity survey revealed strong growth among institutions wanting to gain exposure to bitcoin by CME futures, many of whom have clearing relationships in place to enable access. Emmanuel explained how Skew is trying to position itself as a leader for the products that matter for institutions — futures, options and the spot market, saying:

(17:10) “We have more than 1,000 firms with us signed up on the platform that are using us to crack the crypto markets on a daily basis. So what we think from there is that most of them actually are really I think in what I call the homework phase. So they are not ready just yet to consume and enter the markets but they feel that there is a need really to get a better understanding of how this asset class is going. So what we think is that from there, some of them, maybe a lot of them, will want to start consuming those products so what we want to give them is a way to do it from our platform.”

Emmanuel also discussed how far away the crypto market is for firms with high regulatory requirements to seamlessly trade CME bitcoin futures with crossover in the unregulated derivative and spot markets, saying:

(21:58) “It takes time. I think we are definitely in this homework phase. And so there are probably a number of firms that have already put in place the right infrastructure so that if they want to move, they can move quickly. But my view is that there are a lot of people that have done their homework for a little while and what you need really I think is a push on the client side. And I think this push on the client side is really driven by price….(22:50) You need price basically to force them a little bit to revisit the asset class on a regular basis. And I think there is really this level of bitcoin, the previous all time high, which was at $20,000. And I really think that if we get there again and break out, then the clients will ask a lot of questions all of a sudden at the same time and that probably can give enough of a business case for some of the banks to say okay, I think now we can do it.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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