# How Does a Follow-The-Sun Operational Model Mitigate the Risks of Continuous Crypto Trading? ▴ Question

**Published:** 2025-08-09
**Categories:** Question

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## Concept

The relentless nature of the digital asset market presents a fundamental structural challenge for any institutional trading operation. Unlike traditional equity markets, which adhere to defined sessions, the crypto market operates without pause, a continuous global ledger that processes transactions every second of every day. This ceaseless activity creates inherent operational vulnerabilities. A [trading desk](https://prime.greeks.live/area/trading-desk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) based in a single location, such as New York or London, is exposed to significant market movements and systemic events during its off-hours.

A critical event occurring during the Asian trading session, for example, would find a European desk unstaffed and unable to react, potentially leading to catastrophic losses. The [follow-the-sun model](https://prime.greeks.live/area/follow-the-sun-model/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the institutional response to this structural reality.

This operational framework is built on a simple yet powerful premise ▴ the trading mandate, along with the active risk book, is passed sequentially between integrated trading desks located in key financial centers across the globe. A typical rotation might involve a handover from a North American desk (e.g. New York) to an Asian desk (e.g. Tokyo or Singapore), which then passes control to a European desk (e.g.

London) as the day progresses. This creates a single, continuous, and globally managed trading operation. The core principle is to maintain active, expert human oversight and [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) capabilities at all times, ensuring that the institution’s capital is never left unattended in a market that never sleeps. It transforms risk management from a passive, alert-driven process during off-hours into an active, continuous discipline.

> A follow-the-sun model is a globally distributed operational framework ensuring continuous, 24-hour management of a trading book by passing control between desks in different time zones.

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## The Inherent Risks of Continuous Trading

To fully appreciate the function of a follow-the-sun system, one must first dissect the unique risks of the 24/7 crypto market. These risks extend beyond simple price volatility and touch upon the very structure of market operations.

- **Operational Gaps** ▴ This is the most direct risk. Without a 24-hour presence, there is a significant period where no personnel are actively managing positions or monitoring system health. Automated systems can fail, and unexpected market events require human intervention and strategic decision-making.

- **Overnight Market Risk** ▴ Major market-moving events, from regulatory announcements to protocol exploits, are not confined to specific trading hours. An event in a different hemisphere can trigger extreme volatility, and a static portfolio can incur substantial losses before the home team is back online. 

- **Fragmented Liquidity** ▴ Cryptocurrency liquidity is not uniform throughout the 24-hour cycle. Peak liquidity for certain asset pairs often aligns with the business hours of the corresponding region (e.g. Asian, European, or American sessions). A single-location desk may be forced to execute large orders during periods of thin liquidity, leading to higher slippage and poor execution quality.

- **Counterparty and [Settlement Risk](https://prime.greeks.live/area/settlement-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ In a continuous market, settlement processes are also ongoing. A failure or delay from a counterparty or a disruption at a specific exchange requires immediate attention. A follow-the-sun model ensures that operational staff are always available to manage these exceptions and mitigate settlement failures.

![Interconnected translucent rings with glowing internal mechanisms symbolize an RFQ protocol engine. This Principal's Operational Framework ensures High-Fidelity Execution and precise Price Discovery for Institutional Digital Asset Derivatives, optimizing Market Microstructure and Capital Efficiency via Atomic Settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-high-fidelity-execution.jpg)

## A Systemic Response to Systemic Risk

The follow-the-sun model is, at its core, a piece of organizational architecture designed to internalize and manage these risks. It treats the global market as a single, unified entity and builds an operational structure to match. The handover process between desks is a critical, highly proceduralized event. It involves the complete transfer of the current [trading book](https://prime.greeks.live/area/trading-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), a summary of market conditions, a review of active orders, and an adjustment of risk parameters to suit the incoming market’s characteristics.

This ensures that the trader taking over in Tokyo has the same complete, high-fidelity view of the firm’s position and risk as the trader who just signed off in New York. This seamless transfer of information and control is what transforms a collection of regional offices into a single, cohesive, 24-hour trading desk. It is a system designed for resilience in an environment defined by perpetual motion.

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## Strategy

Implementing a follow-the-sun model is a strategic decision to align a firm’s operational clock with the market’s clock. This alignment moves beyond passive risk mitigation and becomes a framework for seeking a continuous competitive advantage. The strategy hinges on two pillars ▴ maintaining uninterrupted operational control and actively capitalizing on the geographic and temporal distribution of market opportunities. This requires a sophisticated integration of people, processes, and technology, transforming the firm into a globally distributed but centrally managed trading entity.

The strategic imperative is to create a system where the “overnight” period effectively ceases to exist from the perspective of the firm’s trading book. While individual traders and teams work standard business hours in their respective locations, the firm’s market presence is perpetual. This continuity allows for the implementation of trading strategies that would be too risky for a single-location desk.

For instance, strategies that rely on tight, continuous delta hedging or the management of positions with short-term expiry profiles can be managed effectively around the clock. The model enables the firm to act on intelligence and market events in real-time, regardless of where or when they occur.

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## The Global Handoff Protocol

The central process in a follow-the-sun strategy is the handoff protocol. This is a highly structured procedure that ensures a seamless transfer of risk and responsibility between trading locations. A failure in the handoff process would fragment the global book, reintroducing the very risks the model is designed to eliminate. The protocol is far more than a simple status update; it is a complete transfer of command and control.

- **Position Reconciliation** ▴ Before the handoff, the outgoing desk performs a full reconciliation of all positions against the firm’s records and exchange data. This ensures the incoming team starts with a perfectly accurate and verified view of the firm’s exposure.

- **Risk Book Transfer** ▴ The live risk book, including all active orders, current P&L, and key risk metrics (like VaR, delta, and gamma exposures), is packaged and transferred. The incoming desk formally accepts this book, acknowledging responsibility for its management.

- **Market Intelligence Briefing** ▴ The outgoing team provides a detailed briefing on the market conditions they observed. This includes information on major news events, observed market flows, areas of high and low liquidity, and any anomalous activity. This qualitative data is crucial for the incoming team’s situational awareness. 

- **Strategic Mandate Confirmation** ▴ The global head of trading or a designated risk officer confirms the strategic mandate for the upcoming session. This may involve adjusting risk limits, authorizing specific new strategies, or setting particular execution targets based on the 24-hour trading plan.

> The strategic core of the follow-the-sun model is the transformation of geographically separate teams into a single, continuously operating trading entity through rigorous handoff protocols.

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## Mapping Risks to Mitigations

The strategic value of the follow-the-sun model becomes clearest when mapping specific market risks to the structural solutions it provides. The model is a comprehensive defense system against the vulnerabilities of 24/7 trading.

| Risk Category | Specific Risk Example | Follow-the-Sun Mitigation Strategy |
| --- | --- | --- |
| Market Risk | A major protocol exploit is announced during Asian trading hours, causing a price crash in a key asset held by the firm. | The Asian trading desk is fully staffed and immediately responds. They can hedge the position, reduce exposure, or execute other pre-planned risk management procedures in real-time, minimizing losses. |
| Liquidity Risk | A large institutional order needs to be executed, but the firm’s home market (e.g. New York) is in a period of low liquidity. | The execution of the order can be passed to the desk in the region with the highest current liquidity for that asset pair, ensuring better pricing and reduced market impact. |
| Operational Risk | A critical API connection to a major exchange fails overnight. Automated alerts are triggered, but no one is available to troubleshoot. | The desk operating in that time zone includes operational and technical staff who can immediately diagnose and resolve the issue, preventing a prolonged outage and potential trading losses. |
| Regulatory Risk | A sudden regulatory announcement from a European authority impacts the legal status of a traded asset. | The European desk, with its local expertise, can interpret the nuances of the announcement and take immediate, compliant action, while also briefing the other global desks on the implications. |

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## Technology as the Unifying Force

The strategy is unworkable without a sophisticated, globally integrated technology stack. The systems must ensure that every trader, in every location, is operating from a single source of truth. A global, consolidated order book is the heart of this system. It aggregates order flow and position data from all desks into one unified view.

This is supported by low-latency data feeds from all relevant exchanges and liquidity venues. The entire infrastructure must be built with redundancy in mind, with failover capabilities between data centers in different regions to ensure that the failure of one site does not bring down the entire global operation. This technological foundation is what allows the strategic concept of a single, 24-hour trading entity to become an operational reality.

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## Execution

The successful execution of a follow-the-sun model is a matter of extreme precision and operational discipline. It requires a robust technological architecture, clearly defined governance structures, and highly skilled personnel who can operate within a globally coordinated framework. The transition from one trading desk to another is the model’s most critical and complex phase, demanding a flawless execution of pre-defined protocols to maintain the integrity of the firm’s global trading book. This is where the theoretical advantages of the model are either realized or lost.

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## The Operational Playbook for Handoffs

The handoff is a choreographed procedure, governed by a detailed operational playbook. This playbook standardizes the process across all regions, ensuring consistency and minimizing the risk of human error. It is a core component of the firm’s risk management framework.

- **Pre-Handoff Checklist (T-60 minutes)** ▴ An hour before the handoff, the outgoing desk begins a series of automated and manual checks. Systems run diagnostic reports on connectivity and data integrity. Traders finalize their logs and prepare a summary of key market observations and any actions taken during their session.

- **Joint Risk Review (T-30 minutes)** ▴ The lead traders from both the outgoing and incoming desks, along with a regional risk officer, conduct a joint video conference. They review the firm’s current exposure, profit and loss, and key risk metrics. The outgoing team provides a qualitative overview of market sentiment and any ongoing events.

- **Systematic Book Transfer (T-0 minutes)** ▴ At the designated time, the formal transfer of control is executed within the firm’s core trading systems. This is often a multi-factor authenticated process where the incoming desk formally accepts control of the trading book. This action is logged, timestamped, and auditable.

- **Post-Handoff Verification (T+15 minutes)** ▴ The incoming team conducts its own series of checks to verify that they have full control and that all systems are operating as expected. They confirm their ability to execute trades, receive market data, and monitor risk in real-time.

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## Technological and Governance Framework

The execution of this model rests on a sophisticated technological and governance foundation. The systems must be designed for global, 24/7 operation, and the governance structure must provide clear lines of authority and accountability around the clock.

| Component | Description | Execution Requirement |
| --- | --- | --- |
| Global Order Management System (OMS) | A centralized system that manages the entire lifecycle of a trade. It must provide a single, real-time view of all orders and positions across all trading desks and exchanges. | The OMS must be hosted on a distributed, fault-tolerant infrastructure with data centers in multiple regions to ensure low latency and high availability for all teams. |
| Real-Time Risk Management System (RMS) | A system that continuously calculates and monitors the firm’s risk exposure in real-time. It must be able to aggregate risk across the entire global book. | Risk limits and alerts must be dynamically adjustable by authorized personnel (such as the global head of risk) and immediately propagated to all trading desks. |
| Secure Communication Platform | An encrypted, persistent communication platform for traders and operations staff. This is used for the qualitative aspects of the handoff and for real-time collaboration. | All handoff briefings and critical operational communications must be recorded and archived for compliance and auditing purposes. |
| Global Governance Structure | A clear command structure, typically led by a Global Head of Trading or a Global Head of Risk, who has ultimate authority over the trading book at all times. | There must be a clearly defined escalation path for any issues that arise, ensuring that decisions can be made quickly and decisively, 24 hours a day. |

> The viability of a follow-the-sun operation is determined by the precision of its handoff playbook and the resilience of its integrated global technology stack.

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## Personnel and Expertise

The human element is as critical as the technology. Each regional desk must be staffed with traders who not only have expertise in the asset class but also a deep understanding of their local market’s microstructure and regulatory environment. The teams must be trained to operate as part of a global entity, with a culture of clear communication and shared responsibility. The model requires a new type of trader, one who is not just focused on their own P&L but on the successful management and transfer of the firm’s 24-hour risk book.

This collaborative ethos is fundamental to the successful execution of the follow-the-sun model. It is the combination of skilled people, rigorous processes, and resilient technology that allows an institution to effectively mitigate the unique risks of the continuous crypto market.

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## References

- CACEIS. (2025, July 8). Leveraging a “Follow-the-Sun” Model for Continuous Data Availability.

- Zendesk. (2023, December 7). What is the follow the sun model? Advantages + strategy.

- GARP. (2023, February 3). Follow the Sun to Manage Investment Risk.

- Markets Media. (2025, February 18). Cboe’s ‘Follow the Sun’ Model Will Help 24×5 US Equities Trading.

- FOW. (2025, April 17). Follow the sun trading ▴ More trades, processing and reporting – a major data management headache.

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## Reflection

Adopting a follow-the-sun framework is a profound operational and cultural transformation. It moves an institution from being a participant in discrete market sessions to a persistent presence within a single, global, and continuous market. The knowledge gained through this process provides more than just a risk management solution; it offers a new lens through which to view the firm’s entire operational structure.

How does the principle of continuous oversight apply to other areas of the business, such as cybersecurity or collateral management? Where else do operational “gaps” create unacknowledged vulnerabilities?

The true value of this model lies in the capabilities it builds ▴ global coordination, real-time data synthesis, and a culture of seamless information transfer. These are the core components of a modern, resilient financial institution. Viewing the follow-the-sun model as a single solution to a single problem is to miss the point. It is a foundational step toward building a truly global operational intelligence system, one capable of navigating the complexities of any market, in any time zone, at any moment.

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## Glossary

<a href="https://prime.greeks.live/area/trading-desk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Trading Desk

Meaning ▴ A Trading Desk represents a specialized operational system within an institutional financial entity, designed for the systematic execution, risk management, and strategic positioning of proprietary capital or client orders across various asset classes, with a particular focus on the complex and nascent digital asset derivatives landscape. </a><a href="https://prime.greeks.live/area/follow-the-sun-model/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Follow-The-Sun Model

Meaning ▴ The Follow-The-Sun Model represents a global operational framework designed to provide continuous, uninterrupted service delivery and market engagement across multiple time zones. </a><a href="https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Risk Management

Meaning ▴ Risk Management is the systematic process of identifying, assessing, and mitigating potential financial exposures and operational vulnerabilities within an institutional trading framework. </a><a href="https://prime.greeks.live/area/settlement-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Settlement Risk

Meaning ▴ Settlement risk denotes the potential for loss occurring when one party to a transaction fails to deliver their obligation, such as securities or funds, as agreed, while the counterparty has already fulfilled theirs. </a><a href="https://prime.greeks.live/area/trading-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision metallic components converge, depicting an RFQ protocol engine for institutional digital asset derivatives. The central mechanism signifies high-fidelity execution, price discovery, and liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-precision.jpg)

## Trading Book

Meaning ▴ A Trading Book represents a structured aggregation of financial positions held by an institution, primarily for the purpose of profiting from short-term market movements or arbitrage opportunities. </a>

**Tags:** [Global Trading Desk](https://options.greeks.live/area/global-trading-desk/), [Settlement Risk](https://options.greeks.live/area/settlement-risk/), [Operational Risk Management](https://options.greeks.live/area/operational-risk-management/), [Market Microstructure](https://options.greeks.live/area/market-microstructure/), [Counterparty Risk](https://options.greeks.live/area/counterparty-risk/), [Risk Handoff Protocol](https://options.greeks.live/area/risk-handoff-protocol/)	

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### [What Are the Hidden Costs of Counterparty Risk in an RFQ System?](https://options.greeks.live/question/what-are-the-hidden-costs-of-counterparty-risk-in-an-rfq-system/)
![A glowing blue module with a metallic core and extending probe is set into a pristine white surface. This symbolizes an active institutional RFQ protocol, enabling precise price discovery and high-fidelity execution for digital asset derivatives. It represents the Prime RFQ intelligence layer, managing latent liquidity for block trades.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-driving-institutional-digital-asset-derivatives-high-fidelity-execution-precise-price-discovery-for-block-trades-and-capital-efficiency.jpg)

Counterparty risk in an RFQ system manifests as unpriced operational and informational frictions that degrade execution quality and capital efficiency.

- 
### [What Are the Common Mistakes to Avoid When Trading Crypto Options?](https://options.greeks.live/question/what-are-the-common-mistakes-to-avoid-when-trading-crypto-options/)
![Sleek metallic system component with intersecting translucent fins, symbolizing multi-leg spread execution for institutional grade digital asset derivatives. It enables high-fidelity execution and price discovery via RFQ protocols, optimizing market microstructure and gamma exposure for capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-system-rfq-protocols.jpg)

Mastering crypto options requires a systems-based approach, integrating robust risk architecture with precise execution protocols.

- 
### [What Are the Primary Differences in Counterparty Risk between RFQ and CLOB Execution Models?](https://options.greeks.live/question/what-are-the-primary-differences-in-counterparty-risk-between-rfq-and-clob-execution-models/)
![A sleek, dark sphere, symbolizing the Intelligence Layer of a Prime RFQ, rests on a sophisticated institutional grade platform. Its surface displays volatility surface data, hinting at quantitative analysis for digital asset derivatives. Precision mechanisms suggest RFQ protocol engagement enabling high-fidelity execution.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-platform-intelligence-layer-optimizing-high-fidelity-execution.jpg)

CLOB mutualizes counterparty risk through a central guarantor; RFQ concentrates it as a direct, bilateral obligation.

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---

**Original URL:** https://options.greeks.live/question/how-does-a-follow-the-sun-operational-model-mitigate-the-risks-of-continuous-crypto-trading/
