Caspian: Introduction to Institutional Investing and the Caspian Institutional Investment Platform
Obtaining institutional investor backing has traditionally been a stepping stone for the digital asset class’s development. Caspian assists institutions in navigating the crypto landscape.
Institutional investing in digital assets is a sophisticated and difficult undertaking that necessitates a great deal of experience, competence, and knowledge of the crypto market. It also necessitates a solid understanding of traditional finance’s institutional investment processes.
The Caspian crypto trading solution was created to address issues including inaccurate transaction execution, a lack of reporting and compliance, and insufficient security, all of which can stymie the growth of blockchain-focused institutional investing firms.
Caspian fosters the growth of institutional crypto investment by delivering cutting-edge tools that work together to increase the system’s transparency, usability, security, and adaptability.
Large market actors such as commercial banks and investment banks, mutual funds, pension funds, hedge funds, and insurance firms are common examples of institutional investing enterprises, often known as institutional investors.
Institutional investment firms in the United States and around the world, in contrast to retail investors, have a far broader influence on the businesses they invest in and on the market as a whole.
With the passage of time, this power has grown even stronger. Consider institutional investors’ ownership shares in publicly traded corporations.
Institutional investors will possess nearly 80% of the total equity market value of publicly traded companies by 2020.
Institutional Investment Overview
Cryptocurrency and the digital asset market are growing increasingly popular. Institutional investors are constantly entering the crypto sector. Institutional investors are typically organizations that combine funds on behalf of other businesses or high-net-worth people (HNWI).
The amount of money invested by such institutions dwarfs that of the average retail investor. As a result, the stakes are upped by a factor of ten.
Institutional investors spend a lot of money to engage the best-experienced analysts, traders, and portfolio managers in order to mitigate risk and gain a competitive advantage on their large investments.
Because of the huge stakes, thorough market analysis is essential for such institutions.
In the area of digital assets, institutional investors place a premium on undertaking detailed risk assessments and putting in place comprehensive risk tolerance controls. Cryptocurrencies are the most volatile asset class on the planet, with prices fluctuating by 20–30% (or more) in a matter of hours.
Because of the potential for such high volatility, sophisticated order management and exchange integration may be necessary for success.
Furthermore, asset allocation is a vital factor to consider, especially when investing big sums of money. To put it another way, institutional investors’ crypto portfolios are often made up of a variety of cryptocurrencies and crypto goods.
These can be classified by their overall market capitalization (big caps, medium caps, and micro caps), as well as a variety of other distinguishing characteristics such as utility, management, interoperability, and the market capitalization of each cryptocurrency.
Furthermore, portfolios will be divided into various crypto products, such as crypto futures, options, and swaps.
Large and medium cap cryptocurrencies are the most popular among institutional traders and investors in the crypto market.
Several challenges associated with slippages, such as unfavorable bid-ask spreads, low trading volume, and low liquidity, are mitigated through Caspian’s Order and Execution Management System when executing a trade to make a short-term profit or simply buying into or selling out of a position for the long term (OEMS).
Furthermore, the system’s algorithmic Smart Order Router (SOR) improves execution performance by aggregating all exchange volumes into a single liquidity pool.
The Caspian Crypto Trading Solution
Several issues plague the institutional digital asset market, including:
- Poor compliance
- Lack of reporting
- Unreliable trade execution
- Inefficient security
Caspian’s institutional-grade investment and trading management system focuses on five different components to address these issues:
Order and Execution Management System (OEMS): The Caspian Order and Execution Management System (OEMS) is a software platform, exchange aggregator, and suite of tools built exclusively for institutional investors for sophisticated trading and portfolio management.
Position Management System (PMS): Users can manage their trading positions across different exchanges and wallets, monitor real-time and historical profit and loss (P&L) data, and access additional sophisticated analytics using Caspian’s Position Management System (PMS).
Reporting Mechanisms: The Caspian platform has a reporting engine that allows users to create reports and gather additional data to track various aspects of a portfolio’s performance. Long-term and short-term analysis can both benefit from reporting methods. Institutional investing businesses can use specialized reporting tools to examine P&L data, execution data, position size, entry type, exposure, and more in formats like PDF and Excel.
Algorithmic Trading Capabilities: The Caspian trading system uses computer software to execute a set of mathematical instructions (an algorithm) in order to execute several trades at the same time. For institutional investors, algorithmic trading provides additional liquidity and the possibility for increased profitability.
Compliance: Caspian’s automatic compliance system is integrated directly into its servers, allowing it to audit thousands of trades in real time with a latency of only 0.0005 seconds. This system is designed as a one-of-a-kind turnkey solution to avoid disrupting trade workflows or slowing down other sections of the system.
Institutional investors, in general, confront a variety of unique hurdles, particularly in a new market like cryptocurrencies, which raises concerns about inconsistent trade execution, lack of reporting, poor compliance systems, and (at times) insufficient security.
Caspian’s platform combines its OEMS and PMS solutions into one system, allowing for easier compliance, reporting, and algorithmic trading. Caspian is a leader in the blockchain space thanks to the project team’s competence, attention to detail, and never-ending push for improvement.