Kraken acquires Small Exchange in $100M deal to build onshore crypto derivatives market
Kraken can now integrate clearing, risk management, and matching functions under one regulated framework.
Key Takeaways
- IG Group has completed the sale of Small Exchange to Payward, the parent company of crypto exchange Kraken.
- The acquisition is part of Kraken's effort to bring onshore the kind of sophisticated derivatives access that has traditionally been available only on offshore platforms.
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Kraken has acquired Small Exchange, a CFTC-regulated derivatives trading platform owned by IG Group, the major global online trading and fintech firm, in a deal valued at $100 million, according to a Thursday press release.
The acquisition is part of Kraken’s strategy to roll out a full derivatives product suite in the US, strengthening its regulated presence in the world’s largest capital market. Small Exchange’s Designated Contract Market (DCM) license will allow Kraken to design and operate exchange-listed derivatives markets domestically.
“Kraken’s acquisition of a CFTC-regulated Designated Contract Market creates the foundation for a new generation of United States derivatives markets,” said Kraken CEO Arjun Sethi.
“This step connects spot, futures, and margin products inside a single regulated liquidity system, reducing fragmentation, lowering funding latency, and bringing onshore the kind of access and performance that has mostly existed offshore,” Sethi added.
The acquisition strengthens Kraken’s global derivatives network. The firm has established regulated derivatives venues in the UK and the EU.
The move comes after Kraken inked a deal to acquire NinjaTrader, enabling American clients to trade CME-listed crypto futures alongside spot crypto.
IG Group acquired Small Exchange in 2023 from Foris DAX Markets, which is the parent company of Crypto.com. The futures exchange platform offers small-sized contracts aimed at retail traders seeking access to the US futures markets.
