Can there be partially-trustless centralized Counterparty exchanges?

This idea comes from David Johnston of Mastercoin, who mentioned it during the Decentralized apps panel at CoinSummit.

If true, it’s a great comeback for people who bash distributed trading as ridiculous and say it can’t be done because 10 minute wait times are too long.

OTOH I don’t see how a centralized exchange can integrate counterparty in a way that still gives users control over the private keys each time blocks propagate. I’m still not sure what David was getting at.