Financial Heavyweights TD Ameritrade and Cboe Backing ErisX, a New Regulated Crypto Exchange Competing With Bakkt

On Wednesday (3 October 2018), Eris Exchange, a Chicago-based derivatives exchange founded in 2010 and specializing in swap futures, announced ErisX, a planned new regulated crypto exchange offering both spot and futures markets on the same platform that will be competing with Intercontinental Exchange‘s Bakkt platform (which is launching in November) for the attention of institutional investors.

ErisX is “backed by both new and existing investors spanning the traditional capital markets and digital asset markets including DRW Venture Capital, Valor Equity Partners, TD Ameritrade (AMTD), Virtu Financial (VIRT), NEX Opportunities, Cboe Global Markets (CBOE), CTC Group Investments, Digital Currency Group, Nico Trading, Pantera Capital and Third Stone Partners”. Other backers were CMT Digital, Susquehanna International Group, XR Trading, C2 Capital Management and ED&F Man Capital Markets Inc.

The ErisX team, which has over seven years of experience in operating a CFTC-regulated marketplace, plans to enter the crypto space in Q2 2019 by launching fiat (USD) markets for Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC). Then, assuming that it receives approval from the CFTC for its Derivatives Clearing Organization (DCO) application in Q1 2019, it will launch futures contracts for Bitcoin and some other cryptocurrencies such as LTC or ETH in the second half of 2019. As with ICE’s Bakkt, the futures contracts will be physically-delivered rather than cash-settled.

ErisX will have a robust regulatoy framework from the start:

• “… rigorous on-boarding process includes AML/KYC procedures and market surveillance provided by experienced third party specialists to protect our markets and the participants from abusive practices”
• “ErisX is launching a fully-regulated DCO for digital assets in 2019, subject to regulatory approval…”
• “ErisX will apply regulatory best practices from our futures market to improve the digital assets trading experience…”
• “By obtaining individual state regulatory approvals,  ErisX will enable customers in 50+ states and U.S. territories to send fiat currency directly to the exchange and trade digital assets on the spot market”

Neil Brady, the current CEO of Eris Exchange, is the Executive Chairman of ErisX, and Thomas Chippas, the former head of global quantitative execution at Citi, has been named as the CEO.

Don Wilson, founder and CEO of DRW Holdings (which includes Cumberland, one of the world’s biggest crypto traders) said:

“ErisX will eliminate many of the impediments to institutional adoption and usher in a new wave of market participants. This further develops the digital asset space and brings more transparency to these evolving markets.”

Antonio Gracias, founder and a managing partner at Valor Equity Partners, stated:

“To function efficiently, financial markets must demonstrate security and compliance, two critical gaps in today’s digital asset markets. ErisX has recognized there is a monumental opportunity to re-imagine digital asset trading, and they’ve developed a platform to deliver a highly secure yet revolutionary experience that will work better, and for more participants.”

As for Tim Hockey, the President and CEO of TD Ameritrade, he said:

“As investors in ErisX, as well as a strategic contributor in the initiative, we are looking forward to advancing our innovation goals by working with an established, CFTC-regulated exchange that will include digital asset futures and spot contracts on a single platform. Working with these innovative companies gives us the opportunity to help them develop cryptocurrency products that we believe will fill a gap for retail investors within the digital currency ecosystem.”

Finally, Steve Quirk, Executive Vice President of Trading and Education at TD Ameritrade, told Bloomberg:

“Our retail clients are seeking to access and trade digital currency products in the same way they do with traditional capital markets – through a legitimate, regulated and transparent exchange.”

Featured Image Courtesy of ErisX