Futures Market Relaunches as ErisX Crypto Exchange, Backed by TD Ameritrade, DRW and Virtu

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Photo: Eris Exchange, LLC / Facebook

Despite the significant drop of entire market capitlization and Bitcoin’s 50 percent slump, which hit the cryptocurrency market this year, TD Ameritrade, one of the leading global retail brokerages, has announced its investing in ErisX, a new cryptocurrency trading platform owned by Chicago-based derivatives market Eris Exchange LLC. Among other backers are such financial giants as DRW Holdings Inc., Virtu Financial Inc. and Cboe Global Markets (CBOE).

As it was published in a press release on TD Ameritrade’s official website, the company made such a decision with an aim to let consumers invest in cryptocurrency on a regulated platform. According to J.B. Mackenzie, head of futures and foreign exchange trading at TD Ameritrade:

“We wanted to find something that brings cryptocurrency to customers where they can see it on an actual exchange, something they feel comfortable with in regulated space.”

The firm did not reveal the exact funding amount, but it is known that TD Ameritrade is the most significant backer of the upcoming exchange as the retail brokerage has more than 11 million clients and executes an average 780,000 trades per day, a quarter of which are placed using mobile devices.

In comparison to TD Ameritrade, which only invests in ErisX, DRW, CBOE and Virtu Financial have shares in the ErisX parent company, Eris, and will be market makers of the future exchange, which could help ensure a deep order book.

As Douglas Cifu, Virtu Financial CEO, who spoke on the topic earlier this year, the trading firm would make markets on cryptocurrency exchanges once the asset class was more regulated:

“I don’t have to make a qualitative judgment about whether or not those are appropriate asset classes. It’s a new asset class, we’re excited about it. If and when it becomes more regulated and centrally cleared, we’ll put a big toe in and all the little toes will follow and we’ll be a big market maker there.”

The ErisX platform will allow for trading Bitcoin, Ether, Bitcoin Cash and Litecoin, as well as futures contracts on cryptocurrencies. The futures will be physically delivered, which means that when contracts expire, owners will receive the underlying cryptocurrency, not cash. That makes the point for some big players in finance who don’t trust the largely unregulated markets where Bitcoin and other digital coins currently trade.

As executive vice president of trading and education Steve Quirk commented:

“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.”

ErisX plans to launch direct sale of cryptocurrencies in the first half of 2019, with physically settled futures to launch later in 2019, in case the company will get all the neccessary approvals from US Commodity Futures Trading Commission (CFTC) in time.

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