Abstract: When the market fluctuates violently, for securities firms, the stability of the trading system is the most important thing compared to simply low cost.
Earlier this month, influenced by a series of factors including US non-farm and unemployment rate data, war risks, etc., Japanese and South Korean stock markets triggered circuit breakers one after another. Several US stock brokerages also issued rare announcements, saying that "due to abnormalities in the upstream system of the US stock night trading, trading was suspended during the night trading period."
Closing the trading window at an extreme time when the market is volatile has left ordinary investors helplessly watching their assets shrink drastically. The culprit behind all this is none other than Blue Ocean, a U.S. stock night trading system service provider that serves many leading brokerage firms.
It is worth noting that among this wave of affected Hong Kong and US stock brokers, many have announced that they will provide crypto trading services. In essence, there is a certain connection between their crypto trading and US stock trading in terms of trading structure. So what is the process of their crypto trading, and can they avoid the "unplugging" moments similar to US stock trading?
Blue Ocean: Upstream Roles in the Transaction Process
To understand the real reasons why several US stock brokers "pulled the plug", we need to first have a brief understanding of Blue Ocean and the relationship between it and the brokers.
As a system service provider focusing on night trading of U.S. stocks, Blue Ocean has established partnerships with a number of brokerage firms and is committed to providing investors with the service of trading U.S. National Market System (NMS) stocks during non-traditional trading hours (such as Asian market opening hours) through its automated trading system (ATS).
Specifically, Blue Ocean is mainly responsible for providing overnight stock and ETF trading, so that customers of various brokerage firms can trade from 10:00 am to 6:00 pm Beijing time, and try to achieve all-weather US stock trading services. In short, Blue Ocean plays an upstream role in the U.S. stock trading process and can be understood as a financial trading service organization that focuses on specific periods (mainly night hours outside traditional exchanges, etc.).
Last week, due to the surge in trading activities, Blue Ocean was temporarily closed for more than two hours and a small number of transactions were canceled, which affected several downstream US stock brokers. They had to issue an announcement to suspend trading during the night session, causing huge losses to many investors.
Several US stock brokerages are also implicated - when choosing upstream transaction service providers, one should not only focus on transaction costs, but also pay attention to their technical strength and ability to deal with unexpected risks.
You know, in the ever-changing financial markets, every minute of trading opportunities is crucial, especially in periods of volatile market conditions. Short-term trading interruptions may result in investors' strategies not being implemented in a timely manner, thus affecting investment returns.
Licensed exchanges: the core infrastructure behind crypto trading
Among the affected Hong Kong and US stock brokers, several have recently announced that they will officially provide crypto trading services to investors. Their crypto trading processes are somewhat related to US stock trading in terms of trading structure:
You should know that according to regulatory requirements, only licensed exchanges can provide cryptocurrency trading services to Hong Kong investors. Currently, there are only two licensed digital asset trading platforms officially approved by the Hong Kong Securities and Futures Commission. One of them is OSL, whose parent company is listed on the main board of Hong Kong.
This means that the above-mentioned brokerages that have provided crypto trading services have actually reached cooperation with licensed exchanges such as OSL, allowing customers to trade listed cryptocurrencies through comprehensive accounts.
It is understood that the specific transaction process is usually that the brokerage opens an Omnibus Account in a licensed exchange such as OSL, and then trades virtual assets for each customer on the licensed exchange in accordance with the trading instructions of each customer. The trading currency is also a virtual asset or cryptocurrency approved by the CSRC for listing, including Bitcoin and Ethereum.
In a nutshell, licensed exchanges such as OSL in the crypto trading process are like Blue Ocean in the US stock trading process. Compared with securities firms, they are both in the upstream role:
Brokerage dealers, especially traditional investors, are closer. Investors can use a brokerage APP to achieve one-stop trading services for stocks, bonds, futures, options, funds, virtual assets and other targets, which brings great convenience.
However, the back-end cryptocurrency custody, transaction matching, and settlement are still handled by licensed and compliant exchanges such as OSL, which rely on strict security measures and a professional technical team to ensure the safety of investors' crypto assets.
This division of labor and cooperation model not only fully leverages the advantages of securities firms in customer service and marketing, but also relies on the expertise of licensed institutions in compliance, technology and risk control to jointly build a relatively complete and secure crypto trading ecosystem.
But it also means that the smooth operation of the entire transaction process depends on the close cooperation and efficient communication between brokers and licensed institutions. Problems or delays on either side may affect investors' trading experience and asset security.
Compared with the U.S. stock market, cryptocurrency itself is traded 24 hours a day, 7 days a week, and the market volatility and frequency of extreme market conditions are much higher than those of the U.S. stock market. I believe that many friends have had the bad experience of freezes or even "unplugging the network cable" when the market rises and falls sharply, with almost no chance to react, and can only watch as they miss the opportunity to adjust their positions and suffer huge losses.
Therefore, it is very important to ensure that crypto transactions are smooth enough under the premise of asset security. Under such a trading structure, when the market fluctuates extremely, how can licensed exchanges such as OSL avoid the situation of "pulling the plug" similar to US stock trading?
Investment, an important dimension of measuring good products
In fact, from a business perspective, investment and cost are also important dimensions for measuring products.
You must know that a good trading system will inevitably require a lot of time, money, manpower and other resources. This is an objective law that no one can skip. Attracting users with low prices and small profits in a short period of time will inevitably be difficult to maintain for a long time.
After all, crypto trading involves a huge system: not only in terms of trading technology research and development and trading system maintenance, but also in the construction of the entire compliance framework, including license application and operation, asset custody, fund security, accounting audits, etc. These all require continuous investment to promptly handle possible failures and loopholes to ensure uninterrupted and stable operation of the system.
Take OSL as an example. In addition to investing huge amounts of money in the research and development of advanced trading technologies to ensure that each transaction can be processed quickly and accurately in a high-concurrency trading environment, according to insiders, its efforts in compliance and security architecture are even more enormous, most of which are used for investor protection, including private key management, cold wallet maintenance, etc. At the same time, as a licensed exchange, OSL also needs to purchase third-party insurance for its customers' custodial assets.
In terms of coin listing review, OSL will also conduct due diligence on the project team, liquidity, technical security, and regulatory status to prevent the emergence of fraudulent projects such as Plus Token. In addition, the parent company of OSL Exchange is a company listed on the main board of the Hong Kong Stock Exchange. In addition to the requirements of the Securities and Futures Commission, it is also audited by one of the Big Four accounting firms.
Each of these items requires huge investment and cost expenditure. This comprehensive security, compliance and professionalism is also a long-term competitive advantage that is more important than price.
Therefore, from this perspective, low prices and loose rules are never shortcuts. Even if this strategy may be able to gain a certain number of users in the short term, due to insufficient investment in key aspects such as system construction, security assurance, and compliant operations, it is often not worth the cost in the long run and is prone to serious problems such as system failures and data leaks.
In the 24/7 cryptocurrency trading market, every minute of trading opportunity is crucial. Every time the system crashes, it will not only cause losses to investors, but also weaken the market's trust and enthusiasm for cryptocurrency trading, and even cause the industry to fall into a crisis of trust and make it difficult to develop sustainably.
summary
Security and system stability are the lifeline of encrypted transactions.
Especially for the ever-expanding demand for 24/7 non-stop trading, every time a "network unplugging" occurs, a group of users may stop trading cryptocurrencies. Therefore, for brokerages that provide cryptocurrency trading, users will undoubtedly pay special attention to whether the exchange can provide sufficient stability and security in the event of drastic market fluctuations.
Everyone’s demand for compliance, security and transaction stability is rigid. Regardless of whether the market is ready or not, this turning point will eventually come as scheduled.
