Case Study — Liquidity & Hedging

Multi-LP Hedging for Coinpass London

A hedging and internalisation layer connecting Coinpass to multiple liquidity providers over FIX 4.4 — with a local order book, RFQ price sweeping and retail limit orders. Delivered 2020, prior to the platform's acquisition by Oanda.

Executive Summary

Coinpass, a London-based digital-asset platform, needed to connect to multiple external liquidity providers and to internalise retail flow before hedging the remainder in the market. Touch-Fire designed a hedging architecture around a FIX connectivity engine and a local order book — turning a manual, single-quote process into an automated, multi-provider matching and hedging layer.

At its heart is a local order book storing retail limit orders and liquidity provider quotes. This book is swept on every new order and on a timer requesting fresh request-for-quote (RFQ) prices from the LPs. Ultimately matching liquidity-provider quotes against retail interest. FIX gateways talk to external liquidity providers to request quotes and submit orders.

Technical Architecture

A The FIX 4.4 gateways communicate with the external LPs and trading desks, each of which provides quotes in their custom format.

  • The FIX engine connects to multiple external desks (for example separate GBP and USD liquidity providers) and facilitates limit orders and RFQ quote requests.
  • RFQ prices are good for a fixed window; requesting a new quote cancels the previous one, keeping pricing current.

Rather than routing every retail order straight to a provider, the system maintains a local order book and continuously looks for internalisation opportunities.

  • Retail limit orders are stored locally in the order book / database.
  • On every new order — and on a timer — the system requests fresh RFQ quotes from the liquidity desk and sweeps the local order book for possible matches.
  • Matching is liquidity-provider versus retail, so the platform captures spread where it can and hedges the rest with the provider.
Retail Order → Local Order Book → RFQ Sweep (timer / on-order) → LP via multiple flavors of FIX

The hedging layer slots into the broader Coinpass stack through clean, asynchronous interfaces:

  • Internal services submit limit-order requests to the service over REST.
  • Order confirmations, partial fills and fills are pushed back to the platform via REST webhook notifications.
  • Pricing covers five-plus cryptocurrencies quoted in GBP (and Euro) to fine decimal precision for retail display.

Results & Impact

Replaced a manual, single-quote process with an automated layer that connects to multiple liquidity providers and internalises flow before hedging. The local order book and RFQ sweep let the platform match retail flow against provider quotes — capturing spread and reducing the volume that must be hedged externally. A REST-wrapped FIX engine kept the platform decoupled from FIX plumbing, leaving room to add further providers and an in-house algo in a later phase.

Related Capabilities

A full institutional-grade cryptocurrency exchange, end to end. See how this liquidity provider aggregation platform grew into a large cross currency mult-instrument pricing and liquidity engine for quoting (and hedging) in local currency. Smart order routing, arbitrage and custom algos on one architecture.

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