Nomura’s Laser Digital readies institutional trading platform, eyes mainstream market making

Laser Digital is driving forward with plans to launch its trading platform in the first quarter of this year despite the fallout from the collapse of once-vaunted crypto exchange FTX.  

The digital assets firm, which is a subsidiary of banking giant Nomura, launched last year with plans for three core verticals: trading, asset management and venture capital. 

“Overall, I don’t think [the collapses] affect the direction of travel,” said Jez Mohideen, co-founder and CEO of Laser Digital, in an interview with The Block. “If anything, obviously, what it does is affects the business planning, in terms of longevity of how long it takes to become profitable based on the volume and evolution of the ecosystem and so forth.” 

Laser Digital’s most mature vertical is its venture capital arm, which is an extension of the venture investing model that Mohideen followed as part of his time as global digital officer for Nomura’s wholesale business. The new venture arm allows for more digital asset investments to be made across a wider range of industry themes.

The firm’s institutional trading services will be the second of the verticals to launch. It’s being built so that Laser can become a liquidity provider for its current and prospective clients, which range from professionals to hedge funds, family offices and pension funds. 

Conversations with potential clients regarding the major collapses in the crypto industry last year have been “a mixed bag.” Those who have already done their research on the industry are still ready to dive in, whereas others who are less familiar with the industry or asset class are in a holding pattern, Mohideen said. 

“I would say more institutions are looking at the product over the last six to eight months than probably in the previous two, three years,” he added. 

Starting from scratch

Laser Digital’s asset management and trading services are a huge undertaking because everything is being built from scratch. While the outfit is a fully segregated entity from Nomura, it’s still going above and beyond to prevent any risks to its parent company, Mohideen said. For this reason, the company has continued to accelerate hiring even as other large organizations such as Google and Coinbase pull back. 

The company would not disclose its current headcount but said it plans to have around 70 people by the end of this quarter. Mohideen previously told The Block that its earlier target of 100 hires by 2024 was no longer appropriate.

The significant technical task of building the business is all part of Laser Digital’s mission to provide the best liquidity for clients, which will be a core pillar in its business and be vital for offering ancillary products, Mohideen said. 

Best-in-class liquidity

“We are extending those skillsets and building a market maker for institutions,” said Mohideen describing Nomura’s deep knowledge of the market making businesses. 

Market making in crypto is facing scrutiny following the collapse of Alameda Research, which was considered one of the leading players in the field. FTX founder Sam Bankman-Fried was charged with fraud for allegedly misusing customer funds to prop up Alameda, which he also owned. In September, Bankman-Fried drafted an internal document exploring whether the market maker should be shut down, and among the reasons was that Alameda wasn’t making enough money to justify its existence. 

Mohideen hopes that, despite Alameda’s collapse, the industry will continue to see a mix of both traditional and upstart players in making markets. However, traditional players may shine when it comes to solving infrastructure challenges such as prime broker and clearing services that currently create bottlenecks in the system, he added. 

The “Alameda gap”

Several trading firms and market makers are also exploring how to take advantage of FTX’s collapse, whether by acquiring parts of the ruined business, such as its trading engine, or launching their own exchanges or market making services to fill the gap left by the exchange.  

Although the business has a fully institutional focus, Mohideen says the company is happy to be market makers for some of the more mainstream players that would be interested in acquiring FTX assets. 

Laser’s new trading platform and market making service will first launch with proprietary funds.

“I would say to the market we will be ready by the end of Q1, but then again certain jurisdictions we are applying for regulatory license based on how that goes is when we can offer our product to clients,” Mohideen said. “We are in Switzerland, we are also in Dubai and therefore we are engaging with regulators there, so only at a point we are fully regulated where we can offer the products to our client base.” 

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