DRW-Backed Exchange Is Creating a new Crypto Market

Eris Exchange LLC., a Chicago-based derivatives market, is opening a cryptocurrency market backed by DRW Holdings Inc. The new platform will let investors trade bitcoin, ether, bitcoin cash, and litecoin, as well as futures contracts on cryptocurrencies, the company announced in an October 3, 2018 press release.

New Exchange for Digital Asset Investors and Traders

ErisX, a U.S. futures exchange that offers listed interest rate swap futures, announced plans to launch a derivatives exchange (DCM) and clearing organization (DCO) that will include fully regulated digital asset futures and spot contracts on one platform.

According to the company’s press release, the new venture is backed by new and old investors, including DRW Venture Capital, Valor Equity Partners, TD Ameritrade (AMTD), Cboe Global Markets (CBOE), CTC Group Investments, and Digital Currency Group.

The release also mentioned CMT Digital, Susquehanna International Group, XR Trading, C2 Capital Management, and ED&F Man Capital Markets Inc. as other institutions that have participated in the investment round.

Jessica Darmoni, a spokeswoman for ErisX, told Bloomberg that the new ErisX platform will let investors trade bitcoin, ether, bitcoin cash, and litecoin, as well as futures contracts on cryptocurrencies. According to Bloomberg, those futures will be physically delivered, meaning that when the contracts expire, its owners will be given the underlying cryptocurrency, instead of cash.

Physical delivery might be important to some of the big players in finance, Darmoni explained, as they don’t trust the mostly unregulated markets where bitcoin and other digital currencies currently trade.

Bloomberg revealed that DRW and Virtu already owned stakes in Eris, while retail brokerage TD Ameritrade is investing as part of the crypto initiative. The report added that both companies agreed to be market makers on ErisX, which could enable the company to ensure a deep order book.

Physically Delivered Futures to Bring Mainstream Adoption Closer

“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,” Steve Quirk, executive vice president of trading and education at TD Ameritrade, said according to Bloomberg.

Despite bitcoin’s astronomical surge at the end of 2017 and the fact that it is by far the most popular cryptocurrency around today, the coin is yet to see mainstream adoption and day-to-day use. The Eris exchange is looking to change this with the launch of their new exchange platform, and they seem to have managed to get a lot of big names on board with the idea.

ErisX is currently seeking to self-certify the new contracts with the U.S. Commodity Futures Trading Commission. ErisX’s spokesperson Jessica Darmoni also explained that an Eris-owned clearinghouse is also under review and waiting for approval by the CFTC, The clearinghouse will be tasked with clearing all derivatives issued by Eris.

The report also stated that if all of the pending approvals are granted, the cash trading would begin in the second quarter of 2019. The derivatives, however, won’t become available until the second half of 2018, Darmoni added.