Morgan Stanley, the world’s fourth-largest investment bank, has been quietly clearing bitcoin futures contracts for clients amid a wider remit to engage cryptocurrencies even further.
Morgan Stanley has become the second major Wall Street mainstay to offer bitcoin futures contracts for clients, after Goldman Sachs began offering the service last month. Speaking to Bloomberg, Morgan Stanley’s chief financial officer Jonathan Pruzan revealed the bank has already been clearing Bitcoin futures contracts ‘for big institutional clients’.
Bitcoin rode into Wall Street last month after the launch of futures contracts on exchanges operated by CBOE on December 10 and the CME Group on December 18.
Further, Pruzan also added that the bank regularly convenes internal meetings with executives on ‘how else to engage with cryptocurrencies.’
While being coy on details of buy-ins or collaterals for bitcoin futures trades, he added:
“If someone wants to do a trade on the [bitcoin] futures and settle in cash, we’ll do that. I wouldn’t say it’s been a lot of activity, but it’s for core institutional clients who want to participate in a derivatives transaction.”
Bitcoin’s volatility is a factor in the bank determining margin levels for trades, he revealed, before stating Morgan Stanley executives have been “monitoring very closely” the possibility of enhancing their services to crypto-interested clients through market-making (which would involve Morgan Stanley holding cryptocurrencies) or even custody of clients’ cryptocurrencies.
Contrary to its Wall Street rivals, Morgan Stanley’s embracive approach to cryptocurrencies was first hinted at by chief executive James Dorman last year. Taking stage at a public event, the influential Wall Street banker was asked about for his take on cryptocurrencies, within weeks of JP Morgan chief Jamie Dimon’s infamous remark of calling bitcoin a ‘fraud’ – a statement that Dimon has since expressed regret over.
Gorman, who opined bitcoin should not be made ‘illegal’, said:
“It’s a fascinating development, that’s certainly something more than just a fad.”
The crypocurrency-related offering from Goldman Sachs and Morgan Stanley is in marked contrast to the stance taken by Bank of America’s brokerage arm Merrill Lynch, which is keeping its clients and barring its financial advisers from participating in bitcoin investments.