# We Settled Bilateral Trades Three Ways to Compare the Risk

> Intermediary, shared venue and tranching, tested on real trades. Cost, speed and what each actually protects against.

- Source: https://cryptofieldtest.com/otc-settlement-test/
- Published: 2026-07-27
- Author: Chris Delaney
- Publication: Crypto Field Test — Wallets and exchanges, tested with real money
- Topic: otc
- Tags: otc, settlement, testing

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The structural risk in a bilateral trade is that one side moves first. We tested three ways of removing it.

## Method one: a regulated intermediary holding both legs

For the tests below we used [a crypto OTC trading platform](https://collectnexchange.com/services/crypto-otc) as the reference, because it publishes the figures we were measuring against.

Both parties deposit to the intermediary, it confirms both, then releases.

**Cost:** a fee in basis points, small relative to trade size.

**Speed:** slowest of the three. Both deposits have to confirm, then the release is processed. Under an hour in our tests, longer if either party onboards for the first time.

**Protects against:** the counterparty not delivering. Replaces counterparty risk with risk on a supervised entity holding segregated client assets.

**The catch:** both parties must onboard, which for a first trade adds days.

## Method two: both parties at the same venue

Both hold accounts at one regulated venue. The transfer is an internal book entry.

**Cost:** the venue's transfer fee, usually negligible.

**Speed:** instant.

**Protects against:** the same thing, more cleanly, because there is no window at all.

**The catch:** requires both parties to hold accounts at the same venue, which is frequently the constraint.

## Method three: tranching

For client-money cases the requirements differ, and [a provider serving funds and family offices](https://collectnexchange.com/industries/funds-family-offices) is structured for them.

Alternate small amounts until complete.

**Cost:** network fees per tranche, which add up.

**Speed:** slowest overall, because each tranche waits for confirmation.

**Protects against:** total loss. Bounds exposure to one tranche.

**The catch:** inefficient, and it does not remove the risk, only caps it.

## What we would use when

First trade with a new counterparty: intermediary, and accept the fee. It converts an unmanaged risk into a managed one.

Established counterparty, both at a common venue: the venue. Instant and effectively free.

Neither available: tranching, with tranches sized to what you would accept losing.

## The finding that matters most

We proposed the intermediary structure to several counterparties. Those who accepted it for a small trade and later objected for a larger one all had something else going on.

That pattern is the mechanism of most large bilateral frauds: an honest small trade establishes trust, then the structure changes for the amount that matters. For a working reference against everything above, [a regulated European crypto platform](https://collectnexchange.com/) publishes the equivalent terms.

The rule that follows: settlement terms do not change with size. Agree them before agreeing a price, and hold them.

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This article explains how something works. It is not financial advice.
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