London-based bitcoin derivatives platform BTC.sx has partnered with global exchange itBit to integrate its BTC-USD trading currency pair with the bitcoin exchange’s existing offerings.

Joseph Lee, co-founder and CEO of BTC.sx, said the bitcoin exchange ecosystem is now entering its second phase of development, one he believes will be characterized by advanced financial services that go beyond simple currency exchange.

Speaking to CoinDesk, Lee explained how the integration will aim to bolster the current platform itBit users have come to expect:

“The platform essentially emulates what an E*Trade platform would be. We’ve tried to set up a professional foreign exchange trading platform in bitcoin for bitcoin, which we believe we’re the first to fill that niche.”

In turn, director of business development Anthony Lewis indicated that the integration allows itBit to extend a more diverse set of offerings to customers.

“They offer a solid, feature-rich and easy-to-use platform and we are very glad to be working together,” he said.

The announcement comes at a time when bitcoin’s exchange ecosystem is seeing an increasing number of exchanges embrace derivatives, swaps and other more advanced financial tools. OKCoin, for example, introduced margin trading to its platform in June, joining established exchanges with such offerings including Europe’s BTC-e and Hong Kong’s Bitfinex.

New depth to exchange market

Lee said that the partnership will also bring nuance to a market he believes is still characterized by basic services catering to investors without more tenured financial backgrounds.

In a typical foreign exchange market, Lee remarked, traders would not be expected to provide both US dollars and euros should they be looking to trade that currency pair, a development that essentially takes place when bitcoin traders must deposit US dollars to buy bitcoin.

“It’s important to draw an analogy to the typical foreign exchange market,” Lee said. “An exchange is more of a money trading service, where they’ll match buyers and sellers, but an exchange isn’t necessarily a trading platform.”

Instead, itBit users will be able to make small deposits on the exchange in order to wager on the performance of bitcoin, whether its value will rise (long) or fall (short). BTC.sx will then purchase bitcoins on an exchange and report that the deal has been completed.

If the trade goes in the customer’s favor, they’ll be credited with the profit; if not, they’ll lose the deposit. Notably, trades can take place entirely in bitcoin.

Partners in the making

Lee explained that the itBit and BTC.sx teams have been looking for ways to collaborate since the Asia Bitcoin Singapore 2013 conference, where BTC.sx was selected for seed-stage startup fund Seedcoin’s incubator program.

There, the two teams met, finding a common ground with their traditional financial backgrounds.

“What we were quite excited about was the real potential for trading derivatives to take a niche in the market that doesn’t exist,” Lee said. “An exchange is a very important part of that because that’s where the actual settlement occurs.”

BTC.sx indicates it is seeking to add more exchange partners while it expands its presence in Asia. The company’s service is now localised in five languages, including simplified and traditional Chinese.

Still, Lee sees the partnership as less about BTC.sx’s regional goals and more about its search for partners that share its global vision for bitcoin.

“ItBit is a very, very trusted name out there and the professionality that they aspire to, every other exchange should work toward,” Lee said, adding:

“I don’t think they’re in the top five exchanges, but I’d expect them in the very near future to be one of the top exchanges by volume.”

Images via BTC.sx; Shutterstock