Terry Hollingsworth
Global head of futures and OTC clearing sales
Supporting Marex’ clients with broker-agnostic clearing services, market making and liquidity services for crypto ETFs and other derivatives, and delivering customised hedging products through Marex’s financial products team.
2025 has brought an unprecedented surge in institutional trading volumes in the cryptocurrency market.
The CME Group reported a record average daily volume (ADV) of 198,000 cryptocurrency contracts in January, marking a 180% year-over-year increase and approximately $13.6bn in notional value traded daily. Meanwhile, the SEC’s approval of spot cryptocurrency exchange traded funds (ETFs) in January 2024 has enjoyed massive success.
Bitcoin and Ethereum-based ETF investments have reached $136bn this year despite the recent crypto market downturn and may be poised to overtake precious metals as the third-largest ETF asset class.
This growth underscores a broader trend: institutional investors are increasingly viewing digital assets as a legitimate and necessary component of their portfolios.
Regulatory clarity around digital assets has been slowly building for years following the announcement of the Markets in Crypto-Assets (MiCA) framework in the EU and similar initiatives in Asia-Pacific.
The rapid expansion of digital assets trading reflects a fundamental shift in market dynamics and increasing investor demand for regulated products providing exposure to growing cryptocurrency markets.
This shift has only been further accelerated by pro-crypto stance of new US administration which has established an SEC Crypto Task Force and strategic crypto reserve among other regulatory initiatives.
The growth in institutional trading volumes and success of spot crypto ETFs shows that traditional financial institutions are hungry for access to this new alternative asset class.
Meanwhile, crypto-native market makers and other firms are increasingly looking to regulated products to hedge their exposures, aligning their trading strategies with institutional standards.
This dual demand – TradFi’s (Traditional financial) interest in diversification and crypto firms’ need for risk management – is driving demand for trusted intermediaries to bridge the gap between traditional and digital financial markets. Simultaneously, the innovations of decentralised finance (DeFi) are increasingly shaping the structure of TradFi markets.
The future of finance
The growing popularity and increasing regulatory clarity around digital assets has had profound effects on financial institutions. Increasingly, regulated firms are exploring ways to implement blockchain both to optimise post-trade and other operational processes, as well as provide new solutions to their clients.
Innovations that originated in the decentralised finance space have been gradually making their way into the TradFi markets. Stablecoins, originally intended to provide a stable store of value on-chain, gained popularity as a means of on- and off-ramping clients from crypto-native exchanges.
Today, firms are exploring ways to leverage them in payment systems to reduce costs, improve efficiency and simplify audit processes. Financial giants such as J.P. Morgan have even created their own stablecoin-like products to enable automated payments, instant cross-border payments, and streamlined inter-bank trade settlement.
Meanwhile, global financial institutions are exploring how tokenised real-world assets (RWAs) can be used for improved collateral mobility.
Both Euroclear and the Commodity Futures Trading Commission (CFTC) recently announced tokenised collateral initiatives to explore how blockchain could be implemented to improve margining processes.
Cash is currently the most widely accepted form of collateral for centrally cleared trades due to its ease of mobility and stable value. However, in times of market stress – like the UK’s 2022 gilt crisis – the rush to liquidate assets (like government bonds) in order to meet margin calls can contribute to further downward market pressure.
During the gilt crisis, yields unexpectedly rose more than 160 basis points following Liz Truss’ ‘mini-budget’ announcement. Pension schemes, which often rely on leveraged positions to meet the future cash flow of their obligations and swaps to hedge against interest and inflation risks, suddenly had to find cash to meet unexpected margin calls on their interest rate swaps (IRS) and FX forward positions.
As the value of UK gilts declined, these funds had to sell their liability-driven instruments and bonds in order to cover margin calls, resulting in a cascading price effect.
While non-cash assets are currently slower and more cumbersome to move than cash – typically requiring transfer of ownership – the introduction of smart contracts for automatic execution and settlement combined with a regulated market for high-quality tokenised assets like government securities, corporate debt, money market funds, or gold could enable firms to use these as collateral.
By removing the need to liquidate assets in order to meet margin obligations, bond tokenisation could enable more efficient capital allocation and improve market liquidity to support market resiliency during periods of stress. The UK Finance Digital Gilt Roadmap has explored this proposal and led to the HM Treasury’s announcement of a UK Digital Gilt Pilot in November.
Perhaps DeFi’s most drastic impact on TradFi markets has been as a stimulus for major exchanges to consider a move to 24-hour trading windows.
Cryptocurrency markets, which famously never close, have drawn attention to growing retail demand for out-of-hours trading. Last year, the SEC approved the US’s first 23-hour exchange. Cboe has announced plans to expand its equity trading hours to 24 hours, five days a week, while the New York Stock Exchange’s Arca equities venue has signalled a similar shift.
“Cryptocurrency markets, which famously never close, have drawn attention to growing retail demand for out-of-hours trading”
Serving a growing market
In this rapidly evolving financial landscape, Marex provides critical services as a clearing firm, agent, market maker, and solutions provider, supporting our clients with access to global exchanges and risk management strategies.
As a non-bank FCM, we pride ourselves on our ability to address gaps in the market with innovative offerings and by extending service to underserved client segments.
This approach has enabled the growth of our clearing business. As of November 2024, Marex is the largest non-bank FCM in the US, with over $8.5bn in client funds. Over the past year, we have worked to address capacity constraints in the IRS market, becoming the first non-bank IRS clearer on LCH.
We also supported the launch of the FMX Futures Exchange, clearing its first treasury futures trade.
These initiatives provided valuable additional clearing capacity to markets where the number of FCMs has been steadily declining and expanded our US product offer, enabling new cross-margining opportunities for Marex clients.
Increasingly, our institutional clients are looking for robust, regulated access to the growing digital assets market, and Marex is uniquely positioned to address this need. With deep financial market expertise and an approach that balances risk-management and innovation, our clients trust us to provide compliant and comprehensive trading solutions that leverage our best-in-class vendor ecosystem and industry-leading connectivity to major trading venues.
Driving innovation with support for crypto derivatives
It is with this trust that Marex cleared the first-ever Bitcoin Friday Futures Block trade and the first-ever Bitcoin Friday Futures Options trade on CME.
Recognised as the most successful cryptocurrency futures launch in CME history, Bitcoin Friday Futures (BFFs) represent a significant step toward integrating crypto-native trading structures into institutional markets, mimicking the exposure provided by products like perpetual futures without the associated funding costs or risks.
Sized at one-fiftieth of a Bitcoin, this product supports broader market access while maintaining institutional-grade standards. In what can be a particularly volatile market, the BFF’s weekly expirations, lower margin requirements, and improved cost predictability enable more efficient capital allocation and allow traders to better align their positions with new developments and evolving price expectations.
The strong uptake of this product signals growing institutional and retail demand for the sorts of innovations native to decentralised finance. In addition to being one of the largest clearers of spot and crypto derivatives on CME, Marex is also a clearing FCM for Bitcoin and Ethereum futures on Coinbase Derivatives Exchange and CBOE.
We’re proud to support our wholesale clients with broker-agnostic clearing services across multiple exchanges as they navigate this new asset class, providing flexibility coupled with the highest regulatory and risk management standards.
Beyond clearing, Marex is supporting the growth of the regulated digital assets market by providing market making and liquidity services for Crypto ETFs and other derivatives, as well as by delivering customised hedging products and investment solutions through our Marex financial products team.
Marex’s structured product options, including the Bitcoin Cash and Carry Certificate and 12-month USD Tracker Certificate, provide institutional traders with diversified digital asset exposure as well as reliable secondary market liquidity.
Marex’s financial products team also recently announced a collaboration with WisdomTree which will provide institutional investors with tailored exposure to WisdomTree’s ETPs via Marex-issued structured products.
Initiatives such as this one combine the best of TradFi and DeFi markets, coupling crypto market exposure with flexible structured products that provide investors with formal downside protection for managing market volatility and risk.
As DeFi continues to inspire new innovations within TradFi, Marex will continue to seek to play a leading role in market evolution, striving to ensure our clients have access to best-in-class execution, clearing, and hedging strategies across both traditional and emerging asset classes.
Looking ahead, we expect that blockchain solutions will be a core feature of finance’s future, helping the market overcome inefficiencies and opening valuable new opportunities.
As we enter this exciting new era, Marex remains committed to serving the market with industry-leading expertise, advanced risk management, and institutional-grade solutions.
