Talos, a technology provider for institutional trading of digital assets, today announces the public launch of its platform that connects institutional investors, prime brokers, exchanges, OTC desks, lenders and custodians. The Talos platform, which has been live for the last year, delivers a suite of solutions that supports clients through the full trading lifecycle – from price discovery to execution through clearing and settlement, across spot, futures and FX markets.
“The ability to safely and efficiently trade digital assets has been one of the biggest challenges limiting institutional investor adoption of this asset class,” says Anton Katz, co-founder and CEO of Talos. “The institutional trading workflow is significantly more complex than that of the retail sector and demands a very different set of requirements. The Talos platform addresses these key issues – such as security, efficiency, and scale – in both a familiar and customisable environment that tailors the trading experience for each customer.”
While this marks Talos’ industry debut, the Talos platform began development in October 2018, and has been in production since August 2019.
Katz, together with former Broadway Technology colleague Ethan Feldman, co-founded Talos. Katz was at Broadway from 2009-2015 and Feldman was there from 2008-2018. Katz was more recently head of trading technology at AQR, between 2015 and 2018, at which point he left to form Talos. The two have brought together an advisory board that also has deep roots in capital markets, including Dave Cushing (former head of global trading at Wellington), Jennifer Hill (former CFO of Merrill Lynch & Co, and the wholesale banking division of Bank of America), and Tim Grant (CEO of Six Digital Exchange).
“Staying quiet during these last two years was a deliberate decision,” notes Katz. “We know from our experience on the client side how frustrating it can be to get excited about a new technology solution, only to then learn the product is still years away from launch. Ethan and I decided to go about this differently, and built our platform from the ground up, where we could bring to bear our experience in developing trading systems for the capital markets. Once in production, we spent the next several months validating its effectiveness to address real issues with real customers. And now, a year after our first production trade, we are happy to finally be able to talk about our platform publicly.”
The Talos platform is built to support end-to-end trading of digital assets – from onboarding to price discovery, from execution through settlement – including bilateral access to liquidity providers. The platform provides solutions for investors and financial service providers, including prime brokers, OTC desks, lenders, custodians, and exchanges. Clients access the Talos platform via API or GUI, and it is configurable to their unique workflow requirements.
“The design of our platform allows us to update in real-time the instrument set available for trading on the exchanges and OTC desks we’re connected to,” Katz tells Profit & Loss. “As long as our clients are KYC/AML provisioned to trade on those exchanges, they can interact with any available assets immediately. We support anything that the underlying liquidity providers support, so our clients can interact with the world the way it is without having to wait for us.”
Katz explains that Talos is trying to bridge the divide between crypto and traditional FX due to the crossover interest Talos is seeing from investors. “The two asset classes have similarities, but right now, they are traded in very different ways,” Katz explains. “We are using our expertise to bring institutional clients the end-to-end trading workflow they are used to in capital markets. As time progresses, we plan to de-risk some of the inherent risks associated with digital assets trading, allowing institutions to expand their participation with this asset class.
“Trading through Talos is very similar to what our clients are used to in capital markets with bilateral platforms that allow clients to directly interact with the market,” he adds. “So they have their own relationships with exchanges, OTC desks, market makers and other liquidity providers. We provide capabilities for determining best prices across these participants and then trading in ways that reduce our clients’ fees and market impact. To do this, we’ve put quite a lot of work into the algorithmic execution portion of our platform.”
Katz explains that Talos allows clients to define their own price aggregation parameters. “Price discovery is actually a really big element of the platform,” he says. “Even when our clients are not onboarded with specific exchanges, clients can still aggregate indicative prices coming from those exchanges. They can pick and choose which particular venues they want to see, and they can add fees to that aggregation – which allows them to see what their targeted price for a specific execution would be, including all the fees. As a result, we see a large number of clients that choose to onboard additional venues on our platform.”
“Then, as we move to the post-trade side of things, we provide very similar reporting capabilities to our clients as we did in capital markets, among which are transaction cost analysis and the ability to provide best ex proof for their underlying customers,” he adds.
In terms of offering both crypto and FX across a single platform, Katz explains that this is due to interest Talos is seeing from traditional FX investors that are increasingly interested in digital assets, so offering a hybrid came naturally.
“More than half of our clients are sell side institutions and quite a few of them are international. So they may be operating in geographies where liquidity between local instruments and crypto is scarce, As a result, we are starting to connect those two asset classes together. Synthetic liquidity is one of the major things that we are going to offer in the near future, which is one of the main reasons for the decision to add FX markets to the platform.”
“Talos has refined our trading and risk management capabilities, allowing us to provide seamless best execution for our clients,” says Jordan Ettedgui, head of trading at Enigma Securities and one of Talos’ early customers. “The Talos team has shown great flexibility and creativity in problem-solving, helping take our technology stack to the next level.”
“Talos’ platform provides the same levels of stability, performance and security as the leading equities and fixed income trading systems, yet is extremely intuitive and easy to use,” adds Brian Kelly, founder and CEO of BKCM, another of Talos’ early customers.
In building the Talos platform, Katz and Feldman also turned to a strong group of prominent digital asset investors that included Autonomous Partners, Castle Island Ventures, Coinbase Ventures, Initialized Capital, Notation Capital, Founder Collective, and V1.VC. These financial backers were part of the firm’s initial capital raise.
“Every day there are more signals demonstrating that belief in the importance of crypto assets is pervading financial institutions, but the lack of institutional friendly trading platforms has remained a major hurdle to adoption,” says Brett Gibson, general partner at Initialized Capital. “To get comfortable, financial institutions need familiar trading technology, liquidity pools large enough to support their volume, and a brand they can trust. This is precisely why Initialized invested in Talos.”
“One of the biggest keys to widespread institutional adoption of digital assets is a technology infrastructure that unites all market participants and gives them the confidence to operate at scale,” says Arianna Simpson, founder of Autonomous Partners. “That is exactly what Talos has built, and we are excited to help them realise their ambitious launch and growth plans.”
“The Talos team is truly best-in-class – one of the best we’ve encountered in the blockchain space since we began investing in 2013,” adds Nick Chirls, partner with Notation Capital. “They’re uniquely positioned to bridge the gap between the crypto and capital markets communities, and the product is quickly becoming essential for any serious institutional trader.”
“It is a once-in-a-life-time opportunity to be involved in shaping the market structure of an entirely new asset class,” notes co-founder Feldman. “Our expertise is in trading systems, and we built this platform from the ground up specifically for crypto by working closely with our customers. We’ll continue collaborating with them to stay ahead of competition as digital assets begin to truly transform financial markets.”
“We don’t get to see a brand-new asset class emerge very often, so naturally this is an incredibly exciting time, especially for engineers in the financial sector,” adds Katz. “Moreover, these technical and operational innovations we see in the digital assets space will accelerate the progress of other asset classes. Our mission is to bridge these two worlds, using our understanding of institutional requirements, and further drive the evolution of trading.”
Talos plans to roll out additional capabilities in the coming months, focusing primarily on further reducing trading and settlement risks.
Talos is connected with some of the largest digital asset exchanges in the world, including Coinbase, Bitstamp, Kraken, BitMEX, ErisX, LMAX, Gemini, Binance and Binance.US, Poloniex, Bitfinex and Bittrex. In FX world, Talos is connected to LMAX and Sucden Financial. OTC providers include Cumberland, Galaxy Digital, Genesis, B2C2, Alameda, FTX OTC and Heymeyer.