The Small Exchange (TSX) is an innovative project designed to make the futures market more accessible, transparent, and understandable for retail investors. It aims to combine the simplicity of retail trading with the efficiency of professional derivatives. The concept is based on contract standardization and lowering entry barriers, making futures a convenient tool not only for institutional players but also for individual traders. The project positions itself as a “next-generation futures exchange.”
Contents
- History and Concept of The Small Exchange
- Technology, Regulation, and Partners
- Products and Specifications of The Small Exchange
- Business Model and Project Ecosystem
- Achievements, Prospects, and Challenges
- Conclusion
1. History and Concept of The Small Exchange
The Small Exchange was founded by a group of financial experts seeking to rethink the approach to derivatives trading. Its mission is to combine the advantages of the traditional futures market with the convenience of retail trading platforms. The company focuses on simplifying processes and lowering participation costs, reflecting the modern trend toward the democratization of financial instruments.
TSX is built around three main principles: “Small” — reduced contract size, “Standard” — unified conditions, and “Simple” — intuitive product structure. These principles make the futures market easier to understand for traders accustomed to stocks or ETFs. As a result, TSX has become attractive to those who previously had limited access to complex derivative products. The idea has gained particular relevance in the age of digital brokers and online trading.
Registration with the CFTC as a Designated Contract Market (DCM) allowed TSX to operate under U.S. law, ensuring transparency and investor protection. The project relies on strict regulatory standards, which enhance participant confidence. Together, these factors form the foundation for a new generation of exchange products that merge simplicity with institutional reliability.
2. Technology, Regulation, and Partners
The technological architecture of The Small Exchange is built around unified contracts and modern risk management systems. This structure reduces settlement complexity and improves market liquidity. The exchange uses digital infrastructure that allows for rapid order processing and seamless integration with external brokers. This approach provides low latency and transparent execution.
Regulation by the CFTC ensures oversight of all operations and guarantees compliance with federal standards. Holding DCM status gives TSX the legitimacy needed to attract institutional participants. The exchange also collaborates with major brokerage platforms such as Interactive Brokers and StoneX, which have integrated access to its products.
The acquisition by Kraken marked a major milestone in TSX’s development. This partnership combines traditional derivatives with cryptocurrency-based products, creating a unified trading environment. The merger allows the exchange to go beyond classical finance and introduce hybrid contracts adapted to the digital economy — from crypto indices to tokenized futures.
As a result, The Small Exchange’s regulatory and technological foundation ensures a rare combination of innovation and reliability. It lays the groundwork for scaling the platform and uniting traditional and digital assets under one standardized framework.
3. Products and Specifications of The Small Exchange
The core TSX products include equity index futures, currency contracts, and commodity derivatives. Each instrument follows a unified standard with minimal parameter variation, simplifying analysis and trading. The primary objective is to make futures as simple as stock trading.
Among the most notable products is the Small S5C Equity Index Futures contract, based on the performance of 500 leading U.S. companies. This product allows investors to diversify their portfolios without holding individual stocks. Additionally, TSX continues to expand its range of products, including Small USD, Small Precious Metals, and other innovative instruments.
| Parameter | Description |
|---|---|
| Contract Size | 5–10 times smaller than traditional futures, reducing margin requirements. |
| Tick Size | 0.01 point = $1 per tick. A simple and transparent pricing model. |
| Expiration Date | Unified expiration — the third Friday of each month for all contracts. |
| Regulation | Registered as a Designated Contract Market regulated by the CFTC. |
This standardization makes the TSX market especially convenient for beginners. The consistent parameters help traders learn faster and manage positions with less complexity. The uniform tick size simplifies risk control and calculation. Through its transparent structure, TSX introduces a new class of “micro futures,” tailored for modern retail trading realities.
4. Business Model and Project Ecosystem
The Small Exchange operates on a sustainable three-tier model involving brokers, clearing members, and market makers. This system maintains stable liquidity and mitigates operational risks. The platform earns revenue from trading and clearing fees while keeping costs low for participants.
The Kraken partnership strengthened the TSX ecosystem by connecting it to the cryptocurrency sector. The exchange can now offer new types of derivatives linked to digital assets, bridging traditional finance with Web3 technologies. This cross-market integration enhances liquidity and market reach.
Through collaboration with leading brokers, TSX expands its audience and encourages liquidity providers to participate. A broad network of market makers ensures competitive spreads and stable quotes. The project also promotes financial literacy through educational initiatives designed to help traders better understand futures trading.
In summary, The Small Exchange’s business model focuses on building a robust, transparent ecosystem where every participant — from brokers to retail investors — benefits from standardization and accessibility. This reinforces its reputation as an innovative and forward-thinking derivatives exchange.
5. Achievements, Prospects, and Challenges
In a short period, The Small Exchange has achieved significant milestones. Gaining DCM status confirmed its compliance with U.S. regulatory requirements. The launch of the “Smalls” product line introduced a new format of futures trading accessible to a broad range of participants. The acquisition by Kraken strengthened its financial position and opened the door to global expansion.
Future prospects include expanding its product line, entering Asian and European markets, and developing hybrid crypto futures. Integration with Web3 infrastructure positions TSX as a universal exchange for digital and traditional assets alike. The company also emphasizes educational initiatives to build a more informed trading community.
However, the project faces several challenges. Competition from major exchanges like CME Group remains a major hurdle. To attract liquidity, TSX must continue developing its market-making programs and offering innovative products. Brand recognition and institutional trust are also essential for sustainable growth.
The success of The Small Exchange depends largely on its adaptability and strategic partnerships. With Kraken’s support and a well-structured vision, TSX has the potential to become a catalyst for change in the global derivatives industry, shaping a more inclusive and digital future for trading.
6. Conclusion
The Small Exchange represents a unique fusion of innovation and tradition. By combining simplicity, standardization, and technological flexibility, it offers a modern perspective on futures trading. Its mission — to democratize futures — resonates with traders around the world.
With Kraken’s backing, strong regulation, and transparent infrastructure, TSX is well-positioned to become one of the key players in the global derivatives market. As Web3 technologies evolve, the exchange could serve as a bridge between traditional finance and digital assets.
If The Small Exchange continues to deliver on its promises and maintain a balance between innovation and reliability, it could stand as an example of how technology can reshape legacy financial systems — making them more open, accessible, and efficient for everyone.
