From TradFi to Crypto: Inside Flowdesk’s OTC & Derivatives Evolution

In this Amberdata Derivatives episode, hosted by Greg Magadini, from ETF creation flows to FX vol surface dynamics, deep dives into the mechanics behind some of the most complex trades in both traditional and crypto markets. Greg Guttas and Simon Nursey's decades of experience bring a rare level of insight to the conversation.

Greg Magadini sits down with Greg Guttas, Head of OTC, and Simon Nursey, Head of Derivatives at Flowdesk, to explore the evolution from traditional finance to crypto trading at one of the most sophisticated OTC desks in the space.

Greg and Simon bring deep experience from major French banks—Greg specializing in ETF creation/redemption flow, and Simon having spent 17 years as Global Head of FX Options at BNP Paribas. They share war stories from the trading floor, explain complex mechanisms like in-kind vs cash redemptions, and unpack how FX vol surfaces were traded during pivotal global moments.

For more information about Flowdesk, visit: https://www.flowdesk.co/otc-trading/

Introduction

The Amberdata Derivatives Podcast features Greg Guttas, Head of OTC, and Simon Nursey, Head of Derivatives at Flowdesk, discussing their backgrounds in traditional finance (TradFi) and their transition into crypto. The conversation explores ETF mechanics, derivatives trading, and Flowdesk’s comprehensive crypto services.

Background in Traditional Finance

Greg Guttas began his career at Credit Suisse, specializing in ETF portfolio trading, including creation and redemption processes. He explains how ETF mechanics in traditional markets, such as SPY or QQQ, translate to crypto ETFs like IBIT and GBTC. These products require market makers to hedge trades by acquiring Bitcoin or Ethereum through spot or derivative markets, often using in-kind or cash creation methods.

Simon Nursey shares his journey from junior trader to Head of FX Options at BNP Paribas. His experience managing a global team involved risk management, client flow handling, and navigating complex regulatory environments. He emphasizes how a successful desk services clients, provides liquidity, and uses flow intelligence for strategic positioning.

ETF Mechanics and Risk Events

The podcast revisits the 2018 “Volmageddon” event, where inverse volatility ETFs like XIV collapsed. Simon explains the failure was due to poor product design, excessive size, and market predictability around stop-loss triggers. He emphasizes the risks when ETF structures grow beyond the underlying market's liquidity, especially in volatility instruments.

Flowdesk’s Crypto Services

Flowdesk, founded in 2020, began as a token market-making platform on centralized and decentralized exchanges. They offer "market making as a service" to protocols, ensuring liquidity during token launches and daily trading. Exchanges also hire Flowdesk to boost liquidity for less active markets.

Flowdesk’s OTC desk, built by former Genesis traders, provides full-scale services including spot trading, lending/borrowing (credit), and derivatives. The OTC desk offers clients seamless execution without dealing directly with exchanges, addressing both operational and counterparty risks.

Market Making & Airdrops

Greg elaborates on the challenges of market making during airdrops, where protocols often provide both sides of liquidity to mitigate price crashes. Flowdesk balances obligations to maintain spread and depth during volatile TGE (Token Generation Events), highlighting the difficulty of stabilizing nascent token markets.

Market-Making and Liquidity Provision in Volatile Markets

The conversation explores the critical role of market makers in crypto, especially during volatile or illiquid periods. The trading desk’s mandate is not necessarily to pursue directional trades, but to facilitate client flow, absorb risk, and maintain tight spreads even when market conditions are suboptimal. This demands a robust risk-taking framework and infrastructure that allows the desk to execute trades clients need, not necessarily those that are most favorable to the desk, while ensuring appropriate pricing and risk hedging.

Lessons from FX and TradFi: Crisis as a Risk Benchmark

Parallels are drawn between crypto and traditional FX markets, particularly during crisis events. Notable examples include the 1998 LTCM collapse, where uncorrelated assets became highly correlated due to systemic stress, and the 2008 Global Financial Crisis, which tested foundational assumptions like access to capital and custodial security. While crypto has experienced numerous market dislocations (e.g., FTX collapse, SVB crisis), the GFC remains unmatched in its existential severity. However, participants argue that crypto has compressed decades of volatility and structural shifts into just a few years, requiring similarly rigorous crisis management acumen.

Asymmetric Information and Trading Infrastructure Challenges

The OTC crypto market faces informational asymmetry, especially with low-float altcoins. Funds often hold superior insight into token-specific catalysts, while desks manage flow across 500+ tokens with limited granular visibility. While this could introduce adverse selection risk, strong client relationships, transparency, and execution flexibility mitigate such issues. Trading strategies adapt dynamically via risk pricing, pass-through execution, and position warehousing to accommodate client objectives without unduly exposing the desk to one-sided information.

Credit Risk and OTC Market Structure

Counterparty risk remains a core concern, especially for large, bespoke trades. Desks mitigate this through robust CSA agreements, collateralization, and active credit monitoring. The crypto OTC space is relationship-driven, fostering trust and professionalism. Unlike anonymously listed venues, bilateral relationships allow for nuanced negotiation and risk-sharing. Nonetheless, traders are advised to operate with deference and humility, assuming that other parties may hold more information and sizing positions accordingly.

Coinbase–Deribit Acquisition: Strategic and Regulatory Signal

The Coinbase acquisition of Deribit is viewed as a positive signal for crypto options. Deribit’s dominance in crypto vol markets, combined with Coinbase’s institutional backing, may improve confidence, bring more capital to the space, and expand listed assets. Additionally, this deal signals a regulatory shift in the U.S., suggesting greater mainstream acceptance of crypto derivatives and paving the way for broader institutional adoption.

Conclusion

The conversation with Greg and Simon highlights how crypto trading is evolving into a more mature, institutionalized space, driven by experienced professionals who blend traditional finance principles with the unique dynamics of digital assets. From handling illiquid altcoins and asymmetric risk to managing client trust and infrastructure, their insights reveal a market that demands resilience, adaptability, and deep domain knowledge. Their cautious optimism about moves like Coinbase’s acquisition of Deribit underscores a broader shift toward regulatory clarity and institutional growth. Ultimately, their advice reinforces that success in this space requires relentless curiosity, strategic thinking, and a strong personal edge.