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  1. Yes, I think I understand you business idea. However, the problem you are describing is in and of itself the whole problem behind a massive market, the FX derivatives market. You solution delivers to the client the same effects as an FX hedge, but according to you, to a reduced cost. As you describe, you then move the market risk problem from you customers to yourselves, which has the potential to (and undoubtedly will, given enough time) bankrupt your business if you don't hedge that exposure. Now, you in turn must purchase FX derivatives. So, how will you be able to compete with your offeri
  2. Why should your client use your service if you are in your turn hedging the exposure with third parties? Your client could instead just use that hedge themselves directly with equal results but with less intermediaries and reduced cost.
  3. The money Ripple pays Moneygram to subsidize their use of ODL is "contra expense". Its income for Moneygram, but it is used to offset the cost associated with the use of ODL instead of being accounted as revenue.
  4. It was mentioned in one of the articles that now has been removed. I'm cautiously optimistic that there might be some truth behind those claims.
  5. Well it would be new information that they plan to utilize ODL with Santander in the USD <> MXN corridor, wouldn't it? (If it is true...)
  6. I wonder if that is really true though. I work with assessing risk in a bank in the EU (and I'm sorry, but EU regulation is all I know). The EU follows the Basel requirements through the CRR (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0575&from=EN). Article 128(3), which handles the "Standardised Approach" (and lets keep to the standardised approach for simplicity's sake), states that : So exposures in crypto currencies would fall under 3 (b) since there is no obligor to your exposure. This yields a RWA (Risk Weighted Asset, the figure that determines your
  7. So then you would say that the total fee is between 15 and 90 bps, which sounds in line with my previous estimate even if that was in the upper bounds of that range. Your methodology seems solid so I see no reason to doubt your figures. I remember Moneygram somewhere stating that they are selectively applying ODL depending on if the transaction is competitive compared to their alternatives. It would be interesting to see how the total fee for transacting ODL in the MXN/USD corridor develops as volume increases - it should go down in theory. Thanks for your explanation, good work!
  8. This is great! Hope you don't mind sharing your methodology instead of only the result? I can start the discussion by explaining how I think that the correct methodology should look like. Total cost = 0,5 * Spread(USD/XRP) + Slippage(Amount(USD/XRP)) + Exchange Fee(USD/XRP) + 0,5 * Spread(XRP/MXN) + Slippage(Amount(XRP/MXN)) + Exchange Fee(XRP/MXN) Where Spread is the total gap between the currency pair on the exchange, Slippage is the additional effects to the average exchange rate of your transaction due to the volume eating up the liquidity in the orderbook on the exchange an
  9. What does "own" in quotations even mean? They have invested $50 million in shares in moneygram and they own more than 10% of the company. Slippage and spread is two different concepts. Spread is the initial gap and slippage is dependent on the size of the trade. We need to count both slippage and spread for each of the two trades. I can't find any figures for this in the other thread but it is a quite long thread and if there are figures in it I would appreciate a link. I can't see any indication that ODL is profitable still, but would gladly be proven wrong.
  10. This is really good information. Thank you for compiling this! If we could also take the spread for ask and bid in to account for each currency we could calculate an average cost for a transaction of a certain size. (on https://utility-scan.com/#/dashboard it looks like ~USD 20.000 is sent a lot at the moment.
  11. Of course! My source is this article which links to moneygrams Q3 earnings report (here is a free version) were the CFO of moneygram states that moneygram is compensated to bring liquidity to the corridor.
  12. That's because the CEO gets his directions from the owners (i.e. Ripple). In my post history is also a spread comparison between USD/MXN corridor through ODL and regular transactions. There is also evidence that Ripple is paying Moneygram to compensate the losses they make by using ODL. I do believe that ODL could be profitable for remittance companies in the future, but I'm fairly certain that we are not there yet. Now, do you have any evidence that ODL is more cost efficient than regular methods? Please, I would love to see some figures.
  13. There is a reason that Ripple literally had to buy part of moneygram to get them to use ODL. It's not saving Moneygram any money in the corridors current state.
  14. I did some further research and I think most are mistaken on the point the article tries to make about two FX conversions: It is the total spread in the transaction which is the problem. While the end customer - in this case Moneygram as the customer of Ripple - is exposed to very little FX risk when using ODL, someone in the transaction definitely is exposed to FX risk, which is the market maker. The market maker is the person who is providing the ODL to the customer and the one who will be holding the XRP in return for providing the liquidity in the fiat currency. Lets theorise that the
  15. This is a valid argument. I guess that the theory why the two conversions would be superior to one is that, at scale, the two conversion would be cheaper than one traditional conversion. Partly because the transaction in itself would be more efficient and therefore less costly, but also because XRP could become the central currency towards which all liquidity could be focused and thereby bring down liquidity costs (i.e. instead of having a USD <-> MXN, USD <-> EUR, USD <-> CAD, CAD <-> EUR, CAD <-> MXN, EUR <-> MXN corridor you would have USD/EUR/MXN/CAD <
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