Ex-Morgan Stanley developers launch high-speed cryptocurrency derivatives exchange

NEW YORK (Reuters) - A group of former software developers from Morgan Stanley announced on Wednesday the launch of a cryptocurrency derivatives exchange called Phemex that aims to execute trades in less than a millisecond for both retail and institutional investors.

Jack Tao, an 11-year executive with Morgan Stanley where he was the global development leader of the investment bank’s Electronic Trading (MSET) Benchmark Execution Strategies (BXS), co-founded the company. He resigned from Morgan Staley in July.

Tao has assembled a team of more than 30 senior developers, incuding eight former executives from Morgan Stanley’s BES and enterprise application infrastructure teams.

“The internet has made it possible to communicate and transfer information,” Tao told Reuters in a phone interview. So a public blockchain enables instant transfer of value.”

The platform has been in the beta testing phase for several weeks and commenced trading on Nov. 25, Tao said.

The exchange can manage 300,000 transactions per second, and can deliver an order entry and response time of less than 1 millisecond, Tao said.

Phemex offers up to 100 times leverage to both retail and institutional investors in bitcoin, ethereum and XRP contracts, Tao said.

Contracts will soon be able to be backed by not only crypto assets, but also by traditional financial products, such as stock indexes, interest rates, foreign exchange, agricultural commodities, metals and energy, for users to trade easily and with trust, he added.

The Phemex top official also noted that existing crypto derivative trading platforms have been hampered by performance and reliability issues, especially during high-volume trading periods such as bitcoin’s mid-June $10,000 price surge.

The former Morgan Stanley developers have also built their own cold wallet system, which assigns an independent deposit address to each user, so that all assets are kept in cold wallets, or offline, Phemex said in a statement.

(Fixes typo in 2nd paragraph to BXS instesd of BES, and 7th paragraph to XRP instead of XRT)

Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis