FinTech firms LMAX Group and Ripple have signed a strategic partnership that they hope will lead to traditional and alternative capital markets becoming one entity.

The partnership, which will last for several years, will see LMAX Group provide Ripple’s US dollar-pegged stablecoin - RLUSD - as collateral to customers using its institutional trading infrastructure.

According to LMAX Group, this will result in "enhanced cross-collateralisation and margin efficiencies across spot crypto, perpetual futures and CFD trading” for customers across banking, brokerage and buyside.

As part of the partnership, LMAX Group will integrate multi-asset brokerage service Ripple Prime into its digital assets exchange. The firms view this integration as a means of providing a single environment for digital asset trading, tackling issues such as market fragmentation and counterparty risk.

David Mercer, chief executive of LMAX Group, described the partnership as proof that its cross-asset growth strategy is growing in “confidence and momentum”.

Amid increasing support for innovations like stablecoins among American regulators and financial institutions, Mercer said he is confident that convergence of TradFi and digital assets is "well underway."

He added that by working with Ripple and leveraging its US dollar stablecoin, both organisations can “develop a modern financial ecosystem and the complete cross-asset marketplace for institutions globally”.

Ripple has also agreed to several steps to bring LMAX’s products into its own business.

The company will allow users of its Ripple Prime multi-asset brokerage service to access institutional crypto exchange LMAX Digital for trading and holding digital assets.

Ripple has also made a financial commitment to LMAX Group, agreeing to provide it with $150 million to help make its cross-asset growth strategy a success.

The partnership's aim is to “build a more efficient, on-chain financial ecosystem that allows for frictionless settlement and value movement”.

The partnership comes after recent significant milestones for both firms.

Ripple has now obtained over 75 licenses and registrations from global regulators to support its pursuit of developing a cross-asset trading infrastructure that complies with the fast-changing regulatory landscape.

Meanwhile, LMAX Group facilitated institutional exchanges totalling $8.2 trillion last year.

Jack McDonald, SVP of stablecoins at Ripple, added: “This partnership will accelerate the utilisation of RLUSD—already a top five USD-backed stablecoin—within one of the largest and most sophisticated trading environments.”

---