January 26th, 2023
Kaiko Indices is pleased to announce the launch of Reference Rates, the second installment from Kaiko’s Digital Asset Rates Family.
Reference Rates are a unique solution that help financial institutions make informed decisions about their products and services by providing high-quality, BMR-compliant benchmark reference prices for a wide variety of digital assets.
Potential use cases include; benchmarking for derivatives and trading, indexing, risk management, financial modeling, and compliance.
As a benchmark for investable products such as ETPs
By focusing on high governance venues, and mitigating the risk of market abuse, Kaiko Reference Rates offer a reliable and accurate pricing mechanism, ensuring that investable product prices reflect the fair value of crypto assets.
As a benchmark for derivatives and trading
Kaiko’s Reference Rates can be used to price derivatives such as futures and options contracts. By providing a standardized value for the underlying cryptocurrency, reference rates make it easier for traders to calculate the value of these derivatives. Kaiko’s Reference Rates can also be used by traders active in the spot and forward markets.
Indexing
Crypto reference rates provide robust and reliable price sources used in cryptocurrency indices. They are used as the basis for creating a cryptocurrency index, which can be used as a benchmark for passive investment strategies.
Other use cases
Crypto reference rates can be used as a benchmark for hedging cryptocurrency risk by financial institutions and other large investors. They help comply with cryptocurrency trading and investment regulations, as some regulations require financial institutions to use benchmark rates when valuing their assets.
When using Kaiko Reference Rates, clients can have confidence that their products have a strong foundation, are rooted in real trade data, and have expert oversight.
Kaiko Indices has implemented a rigorous vetting process for Reference Rates, which are calculated using only transactions from highly liquid, centralized exchanges that meet a range of stringent requirements including regulatory oversight, Know Your Customer, and Anti Money Laundering processes and procedures. This streamlined in-house process eliminates the risk of confusion and discrepancy.
Alexandre Ruggeri, Head of Kaiko Indices, said: “Our suite of Digital Asset Reference Rates uses a refined exchange selection and aggregation method to provide the market with the fairest market value of cryptocurrencies. Strict exchange vetting, combined with in-depth liquidity optimization, means that we only consider the best combination of exchanges, whether the rate is calculated every 5 seconds or settling in New York, London, or Singapore.
“These clean prices will fuel the most informed decisions and products from pricing derivatives to risk management and accounting. Additionally, as a result of Kaiko Indices being an AMF-authorized benchmark administrator, our rates can be used as underlying benchmarks for regulated financial products.”
For more information, please visit Reference Rates.
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About Kaiko
Kaiko is the leading source of cryptocurrency market data, providing businesses with industrial-grade and regulatory-compliant data. Kaiko empowers market participants with global connectivity to real-time and historical data feeds across the world’s leading centralized and decentralized cryptocurrency exchanges. Kaiko’s proprietary products are built to empower financial institutions and cryptocurrency businesses with solutions ranging from portfolio valuation to strategy backtesting, performance reporting, charting, analysis, indices, and pre-and post-trade.
