Strategy 05 · Spot Trading
Inventory and Settlement
Where the assets sit is the risk.
A spot trading book’s largest exposure is not any position. It is the working balances held on exchanges so that trades can fill instantly. Every asset sitting at a venue is an unsecured claim on that venue. Inventory management is the discipline of holding as little there as the strategy needs, moving the rest to segregated custody, and settling fiat and stablecoin legs through partners built for it.
Working float
Each venue has a working balance per asset sized to the trading the strategy expects to do there and capped by the venue’s counterparty limit. Balances are replenished by transfer from custody when they run low and swept back when they exceed the cap. The sweep is scheduled and automated; the cap is set by people and recorded.
Custody
Everything above the working float is held in segregated institutional custody, multi-party computation wallets with policy controls, or qualified custodians, depending on the asset. Withdrawal addresses at every venue are whitelisted to custody addresses under a separate approval chain from trading. The systems that trade cannot send assets anywhere else.
Fiat settlement
Fiat legs settle through regulated banking partners with digital-asset settlement capability, so that dollars can move on the same timetable as the assets they pay for. Settlement instructions are standing and dual-approved; ad hoc wires are not used for trading flows.
Stablecoin settlement
Where a leg settles in stablecoins, the book holds only issuers with published reserve attestations and clear redemption rights, and holds them in the smallest size the flow requires. Stablecoin balances are a credit exposure to the issuer and are limited as such, separately from crypto inventory.
Practice
How Wesvel approaches it
- 01Working balances per venue are capped at the venue’s counterparty limit and swept to custody on a schedule.
- 02Withdrawal whitelists are administered under an approval chain separate from trading; trading systems cannot add addresses.
- 03Fiat settles through regulated partners on standing, dual-approved instructions.
- 04Stablecoin holdings are restricted to attested issuers and sized as issuer credit.
More in Spot Trading
- Cross-Venue ArbitrageBuying and selling the same asset on two venues at once, and why pre-positioned inventory is what makes it work.
- Smart Order RoutingSplitting large orders across venues and time against live depth, and reviewing every execution against arrival price.
- OTC Block ExecutionExecuting large trades bilaterally with principal liquidity providers, and settling without leaving assets at the desk.
- Decentralized VenuesTrading on automated market makers and on-chain order books, gas, MEV, finality and contract risk in place of exchange risk.