Bridging 160 Years of TradFi Heritage with the Future of Digital Asset Liquidity | Partner Content
Summary
- TP ICAP, the world's largest inter-dealer broker, is shifting its crypto market structure from a "pre-funded" model to a "matched principal" model in 2026.
- This shift allows institutional clients (banks, hedge funds) to trade without pre-depositing assets, utilizing their own choice of custodian, which removes a massive capital efficiency barrier.
- Trenholme predicts the emergence of a parallel on-chain spot FX market where non-USD stablecoins (HKD, GBP) gain market share to facilitate cheaper cross-border settlement.
- The firm aims to have 5-20% of its global settlement volume (currently hundreds of trillions in TradFi) occur on-chain by 2030, driven by the tokenization of money market funds and equities.
Trade Ideas
Trenholme states the new model allows clients to "settle against us from any custodian in the market and their custodian of choice." This "custodian agnostic" approach is a massive catalyst for the largest institutional custodians. As trading friction drops, the velocity of assets held at BNY Mellon, State Street, and Coinbase Prime will increase, driving higher custody and settlement fees without requiring the custodians to take execution risk. Long the custody layer as the primary beneficiaries of the "unlocked" institutional capital. Fee compression in the custody sector or a shift toward self-custody technologies (MPC) bypassing third parties.
Duncan Trenholme
Co-Head of Digital Assets at TP ICAP
TP ICAP is transitioning to a "matched principal" model, allowing them to act as the buyer to every seller and seller to every buyer, removing the need for clients to pre-fund trades. Pre-funding is the single largest bottleneck for traditional institutions entering crypto due to capital inefficiency. By removing this and leveraging their investment-grade credit rating, TP ICAP (via its ADR) is positioned to capture the bulk of wholesale institutional volume that cannot trade on retail-focused exchanges. Long TCIZY as a pure-play on institutional wholesale infrastructure. Regulatory hurdles in specific jurisdictions or failure to attract liquidity against crypto-native competitors.
Duncan Trenholme
Co-Head of Digital Assets at TP ICAP
The speaker predicts a "parallel on-chain spot FX market" driven by the interchange between different currency stablecoins (e.g., HKD stablecoin to USD stablecoin) to bypass expensive fiat rails. A thriving on-chain FX market requires high-throughput, secure settlement layers. While stablecoin issuers benefit, the underlying blockchains (L1s) capture the gas fees and network value of this increased transaction density. Ethereum and Solana are the dominant rails for stablecoin issuance. Long the L1 infrastructure that hosts these forex flows. Regulatory crackdowns on non-USD stablecoins or the emergence of private bank chains (like JPM Coin) that bypass public blockchains.
Duncan Trenholme
Co-Head of Digital Assets at TP ICAP
TP ICAP is preparing infrastructure for when banks and asset managers "issue new products as tokens, whether that's a money market fund, whether that's equities." This explicitly references the Real World Asset (RWA) tokenization trend. BlackRock (BLK) and Franklin Templeton (BEN) are the first-movers in tokenizing money market funds on public blockchains. As the secondary market infrastructure (provided by TP ICAP) matures, these issuers will see AUM growth in their tokenized products. Long the asset managers leading the tokenization race. Slow regulatory approval for secondary trading of tokenized securities.
