The Prime Broker Model: Unlocking Latent Liquidity in OTC Derivatives
Despite the growth of institutional interest in crypto, access to OTC derivatives liquidity remains constrained — not by a lack of capital, but by the way that capital is deployed. Bilateral credit relationships, fragmented custody setups, and inconsistent margining practices all contribute to capital inefficiency. Many traders are forced to overcollateralize or limit activity to a narrow circle of dealers they have legal agreements with. As a result, valuable liquidity sits idle — or never reaches the screens at all. This is where the prime broker (PB) model makes a difference.
A Layer of Intermediation That Enables Scale
In traditional markets, prime brokers provide a central layer of credit intermediation, enabling clients to face a broader set of liquidity providers through a single counterparty. The benefits are well understood: streamlined legal onboarding, consolidated margining, and improved capital efficiency. CoinMatch is building towards that model in crypto. While we already offer a multi-dealer RFQ platform, our next phase involves integrating prime brokerage facilitation — connecting buy-side traders to a broader pool of liquidity via trusted PB relationships, without requiring new bilateral agreements at every turn.
More Liquidity, Less Friction
A PB-enabled model doesn't just benefit the buy side. Market makers gain access to clients they might not otherwise face directly, with the operational and credit lift handled by the PB. This allows both sides to focus on what they do best — trading.
For the ecosystem, this structure helps surface liquidity that would otherwise remain siloed. It brings scalability to OTC derivatives markets that have long been constrained by legal and operational bottlenecks.
The result: deeper liquidity, broader access, and a smoother path to institutional participation.
At CoinMatch, we see prime brokerage as a key unlock for the next phase of growth. Combined with multi-dealer execution and integrated margin infrastructure, it completes the triangle needed to modernize crypto derivatives.
The liquidity is there — it just needs better plumbing.