Cboe Announces Acquisition of ErisX, Expanding into the Crypto Space with a Spot, Derivatives, and Clearing Platform

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Highlights

  • Cboe has prepa­ra­tions in place. Par­tic­i­pants from the indus­try will form a Dig­i­tal Advi­so­ry Com­mit­tee to work on the devel­op­ment of an indus­try stan­dard-set­ting platform.
  • Its stake in ErisX pro­vides it with access to dig­i­tal asset spot and deriv­a­tives mar­kets, as well as clear­ing and set­tle­ment, accord­ing to the CBOE.
  • Assum­ing all reg­u­la­to­ry approvals are obtained, the trans­ac­tion is expect­ed to close in the first half of 2022.
  • The devel­op­ment of a com­pre­hen­sive dig­i­tal asset mar­ket data pro­vid­ing, the cre­ation of index­es, and the explo­ration of fur­ther deriv­a­tives prod­ucts are all possible.

Glob­al mar­ket infra­struc­ture and trad­able com­modi­ties sup­pli­er Cboe Glob­al Mar­kets, Inc. (Cboe: CBOE), has announced its acqui­si­tion of Eris Dig­i­tal Hold­ings, LLC, a sub­sidiary of Eris Dig­i­tal Hold­ings, LLC (ErisX). A dig­i­tal asset spot mar­ket, a reg­u­lat­ed futures exchange, and a reg­u­lat­ed clear­ing house, all based in the Unit­ed States, are oper­at­ed by ErisX Inc. This is a once-in-a-life­time oppor­tu­ni­ty for Cboe to join the dig­i­tal asset spot and deriv­a­tives mar­kets through a dig­i­tal-first plat­form devel­oped in col­lab­o­ra­tion with indus­try part­ners, with an empha­sis on reg­u­la­to­ry com­pli­ance, data trans­paren­cy, and open­ness to all mar­ket participants.

As a result of its found­ing in 2018, ErisX has placed reg­u­la­to­ry com­pli­ance and oper­a­tional integri­ty at the cen­tre of its devel­op­ment and design. Its spot and futures mar­kets are sup­port­ed by high-per­for­mance infra­struc­ture and real-time mar­ket sur­veil­lance, respec­tive­ly. Its real-time clear­ing sys­tem is meant to reduce set­tle­ment risk, while its col­lat­er­al man­age­ment sys­tem facil­i­tates the move­ment of col­lat­er­al between spot and futures accounts with­out caus­ing delays.

Aim­ing to address com­mon indus­try chal­lenges and devel­op the dig­i­tal asset mar­ket to a glob­al lev­el, ErisX was estab­lished in 2014. Though insti­tu­tion­al investors expect dig­i­tal assets to be includ­ed in their port­fo­lios in the future1, a lack of glob­al­ly stan­dard laws and an inad­e­quate­ly effec­tive exchange and clear­ing infra­struc­ture con­tin­ue to be key road­blocks to the adop­tion of dig­i­tal assets. Because of its posi­tion as a glob­al mar­ket infra­struc­ture provider, Cboe is well-posi­tioned to pro­vide a dig­i­tal asset mar­ket­place that is focused on reg­u­la­to­ry com­pli­ance and trans­paren­cy in order to assist insti­tu­tions in embrac­ing the dig­i­tal asset class and offer­ing dig­i­tal asset trad­ing to their customers.

Cboe wants to rebrand its dig­i­tal asset seg­ment as Cboe Dig­i­tal in order to bet­ter serve its cus­tomers. It has also received sup­port from a diverse group of mar­ket par­tic­i­pants, includ­ing well-known retail bro­kers, cryp­to-lead­ing enter­pris­es, and sell-side banks, who have joined forces to estab­lish the Cboe Dig­i­tal Advi­so­ry Com­mit­tee, which will advise Cboe on the future devel­op­ment of the Eris spot and deriv­a­tives mar­kets. Mem­bers of the Dig­i­tal Advi­so­ry Com­mit­tee include DRW, Fideli­ty Dig­i­tal Assets, Galaxy Dig­i­tal, Inter­ac­tive Bro­kers, NYDIG, Pax­os, Robin­hood, Vir­tu Finan­cial, and Webull, all of which are com­mit­ted to con­tin­u­ing their engage­ment with the Cboe Dig­i­tal mar­kets in the future. As pre­vi­ous­ly stat­ed, cer­tain mem­bers of the Dig­i­tal Advi­so­ry Com­mit­tee who have shown an inter­est in pur­chas­ing minor­i­ty own­er­ship inter­ests in Cboe Dig­i­tal wish to become part­ners in the company’s future devel­op­ment. By util­is­ing the engage­ment and col­lab­o­ra­tion of these mar­ket par­tic­i­pants, Cboe Dig­i­tal will con­tin­ue to oper­ate ErisX as a strong, trust­wor­thy, and trans­par­ent dig­i­tal asset exchange plat­form going forward.

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