3 Best Practices for Accelerating the Launch of Your Exchange
Building an exchange order matching engine is a complex, time-consuming endeavor that can sometimes take years to complete. However, with the right strategies and tools in place, it is possible to significantly streamline the process and bring your exchange to life in a fraction of that time.
The following are practical strategies, tools, and best practices that can help expedite your time to market.
1. Assemble the Right Team
Start by hiring the right team. To minimize time and resources required for your exchange development, you’ll want to prioritize hiring experienced analysts, operators, domain experts, and engineers who possess in-depth knowledge of the exchange industry. Their expertise will contribute significantly to streamlining the process and avoiding unnecessary setbacks.
When hiring, consider the importance of daily monitoring and continuous improvement. Look for candidates who have a proven track record of effectively monitoring exchange operations, identifying bottlenecks, and implementing timely solutions. Some of the specific roles you’ll want to consider hiring for include an infrastructure lead, regulatory expert, customer support specialist, investor relations specialist, and a security expert.
Another critical factor in hiring is finding individuals who have a strong overlap of technology and financial experience. Look for professionals who understand both the technological aspects of building an exchange and the intricacies of the financial industry. This hybrid expertise allows for a deeper understanding of the specific requirements and challenges faced by exchanges, ensuring a more seamless integration of technology and financial functionalities.
Leveraging order matching engines like EP3TM can jump-start the effort by providing the essential tools to empower the people that are operating the exchange on a day-to-day basis. Tested and proven tools like EP3’s Admin UI, Jobs API, and Market Surveillance API give exchanges functionality to better operate, monitor, and scale their market.
2. Understand Regulatory Requirements and Prioritize Security
Fully understanding the regulatory environment and its impact on your technology is vital. While online research will be helpful, ensure compliance from the outset to avoid delays and potential legal issues by working with a lawyer. Working closely with legal experts who specialize in the exchange industry can educate you on the process and ensure you meet all the necessary requirements and save you from potential pitfalls. You may consider bringing this in-house as you scale your exchange and depending on the regulatory requirements, but it’s likely you will always want a second opinion.
Compliance and security are paramount when building an exchange. You’ll want to ensure you’re Implementing robust security measures from the beginning to safeguard user data, funds, and transactions. The EP3 platform can be configured via the Market Surveillance API for a variety of alerts and reporting that allows for streamlined compliance and curated monitoring of your exchange
3. Define Your Liquidity Strategy
Thoroughly research and understand where your exchange’s liquidity will come from. Identify the natural buyers and sellers in your target market, as this knowledge will enable you to design and implement effective strategies to attract them to a new way of doing business.
Avoid disintermediating parties that play a crucial role in driving liquidity to your exchange. Disrupting existing market dynamics without a clear alternative can impede the development and growth of your exchange. Exchanges often find success by augmenting markets to incentivize the sources of natural liquidity to change their trading behaviors. With clear incentives and guidance, exchanges are more likely to draw liquidity to their platform. By having this defined, the business will be able to tell a succinct story to its participants, partners, and investors — all key components of monetizing an exchange.
Leveraging an order matching system like EP3 can jump-start your effort from the beginning by providing you with the essential tools and expertise you need to get to the first trade in record time. We’ll help streamline the technology and exchange building process so you can focus on differentiating your exchange, adding value, attracting liquidity, and driving business growth.
Many exchange entrepreneurs may have a brilliant idea but lack the necessary understanding of technology, security, and reliability required to operate an exchange. This knowledge gap can significantly slow down the process of getting to your first trade. That’s where we can help.