Virtu Financial leans into crypto as designated market maker for Canadian bitcoin ETF

One of the largest trading firms in the world is operating behind the scenes of a brand new exchange-traded fund in Canada. 

Evolve EBIT (EBIT) commenced trading Friday on the Toronto Stock Exchange and has since racked up $12 million in assets under management. Still, missed in many of the news stories covering the launch was information about a key partner for the fund: its designated market maker. 

Evolve picked Virtu Financial — the $5 billion publicly traded market-making firm — as its DMM. The DMM plays a big role in the launch of a new fund, supporting liquidity for the product as well as redemptions. Virtu will support large block trades in the product for institutions looking to put on large positions, according to a source.

Virtu will purchase the underlying to conduct such a block trade, leveraging Gemini's clearing service, the source added.

The news is noteworthy, given it is the first crypto-tied product for which Virtu is serving as a designated market maker. Although high-speed trading firms were among the first financial services firms to embrace the volatility of the crypto market, Virtu has been more conservative, avoiding attention in the nascent market. 

Fast-growing market

As for EBIT, its market debut has been dwarfed by another Canadian ETF, BTCC, which has clocked in eye-popping volumes since it began trading last week and has seen its AUM top $400 million.

As noted by Bloomberg's Eric Balchunas, BTCC's volumes on Friday were three times more than any other ETF and "proportionally speaking" equivalent to $5 billion in volumes for a US fund. 

Still, Balchunas said that EBIT had a healthy debut, noting in a message to The Block that "normally a new launch is lucky to be in Top 100 most traded Day One."

"#1 by 3x over simply doesn't happen," he remarked.

Canada Bitcoin ETF $BTCC traded $350m (CAD+USD) today, a 40% jump from yesterday (defying typical Day Two dropoff) and 3x more than any other ETF (unreal). Proportionally speaking this is equiv to about $5b in volume in US (or about 7x more than $GBTC). Two-day aum est $330m. pic.twitter.com/jqJfQGRsnp

— Eric Balchunas (@EricBalchunas) February 19, 2021

As for Virtu's aspirations, the firm is eying the US market for upcoming new fund products.

Although an ETF hasn't been approved in the US, there is a long list of firms from Grayscale to VanEck to Bitwise that could enter the market should securities regulators shift their stance on whether to approve such products.

In a sense, those aspirations square with Virtu's broader aim to bulk up its customer-facing block trading desk. The firm maintains a specialized desk that offers execution in "harder-to-trade" orders in blocks.