>> Announcer: From New York, it's The Cube covering Blockchain Week. Now, here's John Furrier. >> Hello everybody, welcome back. I'm John Furrier, host of The Cube here in New York City for Blockchain Week, New York, also part of the consensus 2018 event, wrapping up day three. We've been rocking and rolling. All the action, cryptos here from business models, financing, technology change and a lot of demos. It's been great. My next guest is Alex Scarsini who's the president of Edgewater Markets. Great to see you, thanks for coming on. >> Thank you, thank you very much. We're excited. >> So we were chatting about a lot of the capital markets and then the go-to markets for these companies, and I got to say the feedback here at the show is the demos are kind of suck-y 'cause everyone's working on the backend technologies. So it's the evolution, but you're starting to see the technology having a real impact. >> Of course. >> What are you working on? Take a minute to explain what you guys are doing, and then we can chat about the general market. >> Sure, sure. So Edgewater Markets, we are developing what we think will be the preeminent platform for the institutional market purely institutional market that'll enable sophisticated investors to be able to buy and sell all the digital currencies or at least in the first stage of our rollout, the 10 or 15 most selected currencies in the same manner that they transact their currency business today, which is efficiently, at low cost, in a low latency environment, and with a A-Z turn around of trade processes from the initial buy or sell to the confirmation process. We've done this before at Edgewater Markets. We do it in the currency business. We have a one-stop shop platform where our clients come to us and efficiently access global equity for the currencies they want. In the market that we have today, it's virtually impossible for the institutional segment to get in and get involved in a scalable manner. There's just too much dislocation globally in terms of exchanges, in terms of collateral that needs to be posted or not, in terms of accessing rates in a low latency environment. None of this exists. >> So is it their problem in that there's too much time to do work? Is it mechanisms that aren't in place? What's the real frustration that you guys are solving? I mean, mention dislocation, be specific. Is it the time it takes? No systems in place? >> Well, imagine that, imagine that you are a large institutional trader and you wanted to buy 1000 units of bitcoin. It's a million dollar log or eight million five hundred dollar log. You'd have to go and check prices on 20 different exchanges where you can buy three cheaply, where you can buy the next four cheaply. By the time you've looked and figured all this out, the price has moved. >> Yeah, exactly. >> It's impossible. Moreover, our clients want to buy 1000 logs and they may very well want to sell them out in 30 seconds. They don't want delivery of the coin, they don't want to deal with cold storage, warm storage. They want to speculate on the movement of these digital currencies the same way they do in Eurodollar, et cetera, so they need to be able to buy their interest in one place efficiently and at the best price. >> It's a great model, so much value there. How's it work and how's it coming together? So, you got to go set up, what, all the market-making deals? So you have to set up the connections? What are you guys bringing to the table? How does the platform work behind the scenes? >> Well the good part about all this is we've done it before. We've been in business for ten years. We've set up offices globally in London, Singapore, New York, Chicago. We're in Mexico City, as well. We have servers in each one of these locations, so we're already a very low latency provider of liquidity, and we already have a like-product for the FX side. We have, obviously, a smart order routing system. We have a central limit order book. We have a pricing engine. We have algos. We've already developed a lot of the processes that we will need for this new product. The most important part of the equation, for us, is we have 300 active institutional clients that are waiting for this product. >> Yeah, they're dying. >> That's why we have a tremendous advantage. >> So what changes are you making for cryptos? So you've got the great leverage from your previous experience, check, awesome. What's the cryptos tweak to your model? What's the key? >> So the market is yet to solve for the custodian part of the equation. In today's world, institutions, and I'm talking about the household names in the macrospace or the high frequency space, I would say 99% of the institutional space deals in the name of their PB, prime broker. Goldman, Morgan Stanley, et cetera, as do we. Now these exchanges are what we call the liquidity providers. You would have to go up and literally set up an account with each one of these exchanges so you can access that liquidity. It's completely inefficient. So what we aim to do, in the absence of a solution in the next year, what we plan to do for our rollout is to open those accounts ourselves and have that collateral with each one of these exchanges, obviously we'll get leverage, there's going to be some cross pollination of products between exchanges at some point. The way you have it today between a London exchange in the equities world and a New York stock exchange where they cross pollinate some of their liquidity pools, you will see that in exchanges throughout the world, and you'll also see some consolidation in that space. So we're going to put up the collateral, we're going to deal with the exchanges, we're going to make sure that we do the post-trade processes on behalf of our client. Our client comes to us, buys 100 units and sells them 30 seconds later, and he's either made money or he's lost money, and that just gets netted out at the end of the day or at the end of the week depending on the agreements that we have with our institutional clients. >> I look at all this, some of the transactions it takes, such a long time to get stuff done because it's just kludgy, it's really a mess. It's exciting that you guys are doing this. >> Well, but there's a need for it. The market is growing tremendously fast. I mean, it's evolved just in the last year, we've evolved from some concepts that were in the preliminary stage to a real demand for a product for an institutional client base that is dying for new product in this environment, meaning the currency markets are very quiet. The bond markets, although they're picking up or percolating right now, are very quiet. This is an area that gives the institutional traders and speculators a chance to arbitrage, to produce alpha, and to do it efficiently. They need a product, and we're there for it. >> Alex, how do people get involved? Obviously they're lining up, waiting for the mousetrap to be built 'cause it's a better mousetrap, obviously, than what's out there. What's next for you guys? How do people get involved? They just call you up at Edgewater Markets? Is there a front end website? How do they contact you guys? >> Well, yeah, certainly we have a website. We're in the process of putting together a product we think will be ready in the next three months for a beta roll out. We've got all hands on deck building it out. We have a handful of clients that have agreed to beta test it for us, so we do think we're ahead of the curve. I've seen a lot of other companies that are trying to do what we do, and we always believe that in the absence of a real clientele that demands the product, it's tough to build what you don't know you'll be asked to build eventually. Our clients are looking at our products, giving us live feedback today as we speak, and these aren't small institutional clients. These are your household names in the macrospace. >> Yeah, they need it. >> The big boys. And so we think we'll have something great in the next few months. >> Great Alex, thanks for coming onto The Cube, really appreciate it. Good luck tonight and continue the events here, and great job. We need that. >> Thank you. Thanks for having me. >> Liquidity's critical marketplaces are being developed. You've got two-sided marketplaces, you got cryptocurrency. This is a new, exciting product at many levels. Financial obviously here with Alex, technology, business model, all covered on The Cube here. I'm John Furrier, thanks for watching. More coverage here in New York City after this short break. (upbeat electronic music)