Ripple has introduced a way for institutional investors to trade stock, gold and oil contracts around the clock through its brokerage arm, Ripple Prime. However, HSBC warned that limited liquidity could make it difficult for the service to attract significant institutional investment.
Daragh Maher, HSBC’s head of digital assets research, described the development as an “evolutionary, not revolutionary” move in a client note on Monday, a copy of which was shared with CoinDesk.
Maher noted that although the market is growing quickly, its size remains small compared with the traditional financial markets it follows. He said the service’s real value would emerge when deeper liquidity allows investors to open positions and manage their exposure while conventional exchanges are closed.
Ripple Prime, formerly known as Hidden Road, now offers swaps linked to more than 100 markets, covering stocks, commodities and currencies. These contracts allow investors to gain exposure to price movements without purchasing the underlying assets. Ripple said trading firm Virtu was already using the platform following its Oct. 15 announcement.
The contracts track perpetual futures offered by Trade.xyz, which provides stock and commodity markets through Hyperliquid, a crypto derivatives exchange. Since perpetual futures do not expire and can trade continuously, investors can take positions on assets such as gold during weekends when traditional markets are inactive.
Ripple Prime manages clients’ collateral and risk across their trades, with RLUSD, Ripple’s dollar-pegged stablecoin, available to support positions. The brokerage had already integrated with Hyperliquid in February.
Despite the expanded access, HSBC highlighted the difficulty of executing large orders in markets with limited trading activity. Institutional investors looking to place multimillion-dollar positions need sufficient counterparties to take the opposite side at acceptable prices.
Recent market activity illustrated the risks. Nearly $52 million in leveraged chip-stock positions were liquidated within 10 minutes as selling spread from Binance to Hyperliquid. With the underlying shares closed for trading, the contracts lacked updated stock prices, exposing traders to additional uncertainty.
HSBC expects early participation to come mainly from market makers, proprietary trading firms and hedge funds using basis-trading strategies. These approaches aim to profit from price differences between related assets or contracts rather than establish longer-term investment positions.
Maher suggested that broader institutional adoption may remain limited until liquidity improves enough to support larger trades and more effective risk management.
The bank added that Ripple’s ability to compete with established brokers and trading venues will depend on whether its platform delivers lower costs, simpler execution and more efficient collateral management.
Ripple is also earning revenue by financing leveraged stock trades, moving into a business traditionally dominated by banks, according to CoinDesk. The company currently offers the new swaps under its British Virgin Islands license and plans to expand into other jurisdictions.
Although Ripple has identified one of its early customers, it has not revealed how much trading activity the service has generated so far.
