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1) Typical market structure in the US is highly intermediated: when a consumer purchases AAPL, they often go through 10+ counterparties from start to finish.

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SBF

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2) Regulatory frameworks are often built around this assumption: separate licensing for the brokers, clearing, custody, matching, etc. But there are some advantages to a less intermediated system. And more generally, you can apply the same protections to it.

6:46 PM · Feb 6, 2022Twitter Web App

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3) As long as whichever entity is managing a part of the process is held to the same standard as an intermediary would be, the customer is equally protected--and in many cases, the core entity is held to a higher standard.

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SBF

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Feb 6

4) At the same time, consumers are given more equitable access to markets and data. If you go to ftx.us, you can place an order directly to the matching engine, and you can access all of our marketdata for free.

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Feb 6

5) And, finally: in the digital asset ecosystem, blockchains allow exchanges to directly custody and clear assets natively. We've written up a paper on the relationship between investor protections and intermediation here: ftxpolicy.com/investor-prote.

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After the 08 GFC, assumption from the regulator is that the probability of crises is lower with a competitive system, i.e allowing new entrants segregated form banks in every part of the process was seen as good. The "too big to fail" Lehman/Merrill event could then be avoided.