CFTC Allows ErisX to Offer Physically Delivered Digital Asset Futures Contracts
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July 02, 2019
CFTC granted TD Ameritrade-backed ErisX a derivatives clearing organization (DCO) license under the Commodity Exchange Act (CEA) allowing the Eris Exchange to offer physically delivered digital asset futures contracts.
On July 1, TD Ameritrade-backed ErisX announced that the Commodity Futures Trading Commission (CFTC) has granted it a derivatives clearing organization (DCO) license. The regulatory agency that has jurisdiction over futures markets granted ErisX Clearing the license under the Commodity Exchange Act (CEA). This new license will act as a supplement to the Designated Contract Market (DCM) license. Eris Exchange already holds the DCM license since 2011.
The Chief Executive Officer of ErisX, Thomas Chippas, explained saying:
“ErisX is unique in that for our digital asset market, we have divided the trading and settlement functions using traditional DCM (exchange) and DCO (clearing) models. This operational model reflects the structure that institutional investors anticipate from other asset classes and will help drive these markets toward greater relevance and accessibility.”
The ErisX clearinghouse will now provide services for the clearing of digital asset futures contracts traded on ErisX’s regulated derivatives market. This service will launch sometime later this year. After receiving the DCO license, Eris Clearing confirmed that it will comply with the 17 core principles under the CEA.
Some of the core principles that ErisX must adhere to include risk management capabilities and rule enforcement policies. Also, the company must establish standards and procedures to shield members and participant funds. The General Counsel at ErisX, Laurian Cristea, added:
“Our clearinghouse is guided by a long-standing regulatory framework that protects participants and market integrity; and we are applying these same regulatory principles to our recently-launched spot market as well.”
Cristea believes that getting the DCO license is the second major enterprise goal that ErisX has achieved in 2019. The first key enterprise goal achieved this year was the launching of the company’s spot market. When the futures on digital assets launch later in the year, ErisX is well prepared. The company will provide the market with one unified platform for both spot and futures.
The award of this license is getting positive feedback from the market with the CEO of DRW, Don Wilson, saying:
“By establishing a marketplace and developing infrastructure normally associated with traditional markets, ErisX has eliminated many of the challenges institutional investors face in accessing digital assets.”
Many see the licensing as a step in the right direction of the development and maturation of the markets. CFTC seems to be gradually allowing different companies offering digital assets services to operate in the market. Last month, we announced that the regulatory agency licensed LedgerX to settle futures in actual Bitcoins. In that event, the Bitcoin derivatives provider will offer physically settled BTC futures contracts to institutional and retail customers.
After the CFTC granted the DCO license to ErisX, Digital Asset Principle Investing at Susquehanna International Group, Dean Carlson, stated:
“ErisX has worked diligently with market authorities to build an environment that follows time-tested processes and guidelines, which is unique to the digital asset space.”
The infrastructures and regulations functioning on the ErisX platform guarantee that security, transparency, and familiarity rule in this nascent asset class.