- Ripple wants to make institutional crypto trading more centralized and capital efficient with the digital prime broker model.
- In this context, the XRP Ledger is primarily intended to support on-chain processing and credit lines.
Ripple wants to fundamentally change institutional crypto trading and published a new white paper on February 26th. At the center is a model called Digital Prime Broker (DPB). This is intended to replace today’s dominant, fragmented relationships between exchanges, market makers and brokers with a central credit, risk and settlement structure.
Ripple’s Managing Director for the Middle East and Africa Reece Merrick writes via X:
“Traditional financial products meet digital assets, but the connection is not yet fully developed. Managing a complex web of exchanges and bilateral risks is not only time-consuming, but also unnecessarily ties up capital. Ripple’s new white paper introduces the Digital Prime Broker (DPB) model, which transforms complex risks into an optimized 1:1 relationship.”
The solution = Ripple Prime
The Ripple white paper provides a structure that removes this complexity. Ripple’s main focus is on the OTC market for cryptocurrencies, which from the US company’s perspective is still based on retail infrastructure.
Exchanges bundle execution, custody, credit and clearing in a single platform. According to Ripple, this leads to fragmented liquidity, hidden financing costs, multiple counterparty risks and tied up capital that cannot be used efficiently.
The white paper compares this model with the structure of the foreign exchange market. There, prime brokers take over the credit intermediation, trades across multiple trading venues are aggregated and cleared, and settlement is netted, typically on a T+1 basis.
It is precisely this solution that Ripple now wants to establish as an institutional standard for digital assets. In the DPB model, the customer only concludes a central master contract (with Ripple) with the prime broker. All transactions happen in the background with approved liquidity providers or market makers and are then given to this broker.
The white paper identifies three key benefits as better execution through aggregated liquidity, centralized credit and risk management, and greater capital efficiency through standardized net settlement and cross-collateralization.
Ultimately, Ripple also refers to its own service: Ripple Prime.
The company attributes an additional role to the XRP ledger. This could enable settlement via on-chain credit lines within a DPB framework, with financing costs being calculated transparently and explicitly to those who actually use the advanced settlement liquidity.
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