Ripple opens 24/7 stock and commodity swaps to institutions as HSBC flags thin liquidity

Ripple Prime now offers round-the-clock swaps on stocks, commodities and currencies

Ripple is letting institutional clients bet on stocks, gold and oil at any hour through its brokerage business, Ripple Prime. The service, formerly known as Hidden Road, lets clients trade swaps tied to more than 100 markets, including shares, commodities and currencies.

A swap is a contract that pays out based on price movements, so a client can take a position without buying the underlying asset. According to Ripple's Oct. 15 announcement, trading firm Virtu is already using the service.

Ripple had already connected its brokerage to Hyperliquid in February.

Key points

• Ripple Prime clients can trade swaps linked to over 100 stock, commodity and currency markets around the clock.


• Ripple's dollar-pegged RLUSD stablecoin can be used as collateral for those trades. A stablecoin is a crypto token designed to hold a steady value.


• The swaps track perpetual futures listed by Trade.xyz, a platform for stock and commodity contracts on Hyperliquid, a crypto derivatives exchange. Perpetuals are contracts with no expiry date that trade all day and night.


• HSBC's Daragh Maher called the launch "evolutionary, not revolutionary."


• The swaps are offered through Ripple Prime's British Virgin Islands license, with more jurisdictions planned.


• Ripple has named an early customer but has not disclosed how much the service has traded.

What HSBC says about liquidity

Daragh Maher, head of digital assets research at HSBC, said in a note to clients on Monday that the launch is an "evolutionary, not revolutionary" step. A copy of the note 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."

HSBC also said a fund wanting to trade millions of dollars still needs someone willing to take the other side at an acceptable price. Until market depth grows, the bank expects activity to be concentrated among market makers, proprietary traders and hedge funds pursuing basis trades rather than institutions seeking strategic hedges. Basis trades try to profit from price gaps between related positions, such as a contract and the asset it tracks.

The bank said Ripple's success would depend on whether the service is cheaper, simpler and makes better use of clients' collateral than existing brokers and venues.

A weekend selloff showed the risk of trading when stock markets are shut

Nearly $52 million in leveraged chip-stock positions were forcibly closed in 10 minutes as selling spread from Binance to Hyperliquid. The shares themselves were not trading, so the contracts had no fresh stock-market prices to follow. The event, which happened on a Saturday, exposed the risks of participating in these new markets.

What is confirmed

• 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.


• Clients deal with Ripple Prime, which manages their collateral and risk across positions, and can use RLUSD to back their trades.


• The swaps track perpetual futures listed by Trade.xyz on Hyperliquid.


• Virtu is already using the service, per Ripple's Oct. 15 announcement.


• The offering runs through Ripple Prime's British Virgin Islands license, with more jurisdictions planned.


• Ripple is earning fees financing leveraged stock bets, as CoinDesk reported this month.

What is still unclear

Ripple has not disclosed how much the service has traded. It is also not yet clear whether enough buyers and sellers will show up for large positions, which HSBC said could limit how much money follows the launch.

Why this matters

The service gives institutions a way to take positions on things like gold, stocks and oil on days and at hours when conventional markets are closed. HSBC's warning and Saturday's liquidations show that trading without a live underlying market can carry extra risk.

Sources

• CoinDesk