CHICAGO, Oct. 20, 2021
/PRNewswire/ -- Cboe Global Markets, Inc. (Cboe: CBOE), a
leading provider of global market infrastructure and tradable
products, announced it has entered into a definitive agreement to
acquire Eris Digital Holdings, LLC (ErisX). ErisX operates a U.S.
based digital asset spot market, a regulated futures exchange and a
regulated clearing house. Ownership of ErisX presents a unique
opportunity for Cboe to enter the digital asset spot and
derivatives marketplaces through a digital-first platform developed
with industry partners to focus on robust regulatory compliance,
data and transparency.
Founded in 2018, ErisX was designed and built with regulatory
compliance and operational integrity at the fore. Its spot and
futures exchanges utilize high-performance infrastructure and
real-time market surveillance. Its real-time clearing system is
designed to address settlement risk while collateral management
helps to allow seamless movement of collateral between spot and
futures accounts.
ErisX is built to mitigate common industry pain points and grow
the digital asset market to a global scale. Despite the fact that 7
in 10 institutional investors expect to have digital assets be part
of their portfolios in the future,1 a lack of globally
consistent regulation and a dearth of sufficiently robust exchange
and clearing infrastructure remain major barriers to entry. As a
global market infrastructure provider, Cboe is uniquely positioned
to offer a digital asset marketplace focused on regulatory
compliance and transparency to help institutions embrace the
digital asset class and offer digital asset trading to their
clients.
Cboe plans to operate the digital asset business as Cboe
Digital. The company also has secured the support of a broad range
of market participants, including well-established retail brokers,
crypto-leading firms and sell-side banks, who are expected to form
a Digital Advisory Committee tasked with advising Cboe on the
ongoing development of the Eris spot and derivatives markets. As
members of the Digital Advisory Committee, DRW, Fidelity Digital
Assets, Galaxy Digital, Interactive Brokers, NYDIG, Paxos,
Robinhood, Virtu Financial and Webull are committed to ongoing
engagement with Cboe Digital markets. Certain members of the
Digital Advisory Committee listed above also intend to acquire
minority ownership interests in Cboe Digital and to serve as
partners in the growth of the business. Cboe Digital will leverage
the engagement and collaboration with these market participants to
continue to operate ErisX as a resilient, trusted and transparent
digital asset venue.
Ed Tilly, Chairman, President and
CEO of Cboe Global Markets, said: "We believe our acquisition of
ErisX, coupled with broad industry participation and support, will
help us bring the regulatory framework, transparency,
infrastructure and data solutions of traditional markets to the
digital asset space. ErisX has shown an unwavering commitment to
improving spot and derivatives crypto trading, and I am confident
that together we can not only meet the growing demand for
institutional and retail trading solutions but also push the
boundaries of digital asset innovation and unlock its next phase of
growth."
Thomas Chippas, CEO of ErisX,
said: "Derivatives are an essential component of a scaled digital
marketplace, and Cboe, as one of the world's largest derivatives
exchange operators, has the global customer network, international
operations and innovative vision to not only grow ErisX, but the
entire digital asset space. With Cboe's support and network of
industry partners, ErisX will enable new and established firms to
compliantly and confidently offer cryptocurrency spot and
derivative products to their clients, making our transparent and
trusted digital asset market the destination of choice for any
market participant offering crypto spot or derivative trading
services now and in the future."
Cboe plans to use its real-time, risk and derived data expertise
and global network to provide a transparent view into digital asset
markets and trade execution. Leveraging digital asset data from
ErisX and Cboe's existing index calculation capabilities, Cboe
Digital intends to develop and distribute digital asset indices for
potential use in ETP creation and other derivative product
opportunities.
Cboe also plans to leverage the Digital Advisory Committee to
provide input and guidance on the development of a robust market
data offering based fundamentally on actionable bid and offer
prices from the ErisX spot crypto market. This market data offering
is expected to be modeled after established best execution
practices in other asset classes, ultimately intending to develop a
benchmark to help Cboe Digital's industry partners and other market
participants evaluate the appropriateness of crypto execution
prices.
Don Wilson, Founder and CEO of
DRW, said: "We founded ErisX with the vision of creating a
transparent, well-regulated market for cryptocurrencies and
cryptocurrency derivatives in order to facilitate adoption by
traditional financial institutions. Cboe's acquisition of ErisX and
creation of Cboe Digital with a group of institutional partners
will accelerate this vision. I want to congratulate the ErisX team
on this exciting milestone, and we look forward to continued
collaboration on this project."
Doug Cifu, Co-Founder and CEO of
Virtu Financial, said: "As a global market maker and execution
services provider, we have first-hand experience with how Cboe's
technological expertise and operational excellence can enhance
markets. Cboe's entry into the digital asset space leverages
its impressive track record of bringing competitive technology and
innovative solutions to regulated markets."
Robert Gutmann, Co-founder and
CEO of NYDIG, said: "NYDIG is proud to partner with Cboe and ErisX.
Cboe has been at the forefront of financial innovation since its
inception. By teaming up with ErisX, one of the most trusted
platforms in the digital asset space, Cboe is once again showing it
is committed to creating the future of finance. We share Cboe and
ErisX's vision of building an even more robust global marketplace
for bitcoin spot and derivatives trading."
Tom Jessop, President of Fidelity
Digital Assets said, "The Cboe-ErisX combination represents an
attractive opportunity to collaborate with a global exchange
operator who can bring increased regulatory proficiency, resilient
technology and product expertise to digital asset markets. We look
forward to collaborating with Cboe Digital."
Damien Vanderwilt, Co-President
and Head of Global Markets of Galaxy Digital (TSX: GLXY), said: "As
a leading financial services and investment management innovator in
the digital asset, cryptocurrency, and blockchain technology
sectors, Galaxy Digital is proud to partner with Cboe to enhance
both our spot and derivatives execution capabilities, as well as
our ability to provide deep liquidity to our institutional clients,
supporting our mission to institutionalize digital asset markets.
As with traditional financial market dynamics, the digital assets
ecosystem critically needs scalable, well-governed, and
unconflicted venues to promote reliable price discovery and capital
exchange."
Matthew McDermott, Global Head of
Digital Assets at Goldman Sachs, also noted support, saying: "This
is an exciting development for institutional adoption of
cryptocurrencies, and we look forward to finding ways to work
closely with the newly created group, Cboe Digital."
Chris Isaacson, Executive Vice
President and Chief Operating Officer of Cboe, said: "Cboe's entry
into the digital asset space is directly consistent with our
purpose to operate trusted, inclusive global markets that enable
participants to define a sustainable financial future. With ErisX,
in a single step, Cboe is able to enter the digital asset spot,
data, derivatives, and clearing ecosystem. Now is the right
time to fully embrace and help define this emerging asset class,
and Thomas along with the ErisX management team of finance and
technology veterans, are the right team to help us bring the
benefits, structure and transparency of our trusted markets to the
digital asset space."
ErisX's futures exchange and clearing house are regulated by the
CFTC, and ErisX's clearing house is registered with FinCEN and
licensed in many U.S. states and territories. ErisX runs a
recognized and tested market surveillance program inclusive of
trade practice surveillance and real-time surveillance with 24x7
capability and systems.
ErisX's infrastructure was built from the ground up to exceed
traditional capital markets standards of performance and
reliability, and its functionality includes a centralized limit
order book, block trading and a low latency, high reliability
design – all on a single technology platform accessible via FIX,
REST, websocket and third-party ISVs. ErisX's integrated product
suite includes multiple digital currencies, stablecoins, physically
delivered Bitcoin and Ether futures, and cash-settled futures.
The transaction, which Cboe plans to fund with a combination of
cash on hand and increased debt, is expected to close in the first
half of 2022, subject to regulatory approvals and other customary
closing conditions. Terms of the deal were not disclosed, however
the company noted that the purchase price is not material from a
financial perspective. The industry partners Cboe brings to the
ErisX ecosystem provide unmatched expertise for an expansive
institutional and retail customer base. By running a front-to-back,
purpose-built, regulatory-compliant platform, Cboe plans to offer
the purest access to trading, clearing and data that exists in the
spot and derivative digital asset marketplaces today. ErisX is
positioned to be a long-term leader as regulation is expected to
play an increasingly prominent role in digital assets, and
following the closing, Cboe plans to make the early investments
necessary to help maximize revenue growth potential over the medium
and long term. Cboe anticipates ErisX will reach EBITDA
profitability within two to three years after closing the deal,
benefiting from a diversified stream of revenue drivers.
About Cboe Global Markets, Inc.
Cboe Global Markets (Cboe: CBOE), a leading provider of market
infrastructure and tradable products, delivers cutting-edge
trading, clearing and investment solutions to market participants
around the world. The company is committed to operating a trusted,
inclusive global marketplace, providing leading products,
technology and data solutions that enable participants to define a
sustainable financial future. Cboe provides trading solutions and
products in multiple asset classes, including equities, derivatives
and FX, across North America,
Europe and Asia Pacific. To learn more, visit
www.cboe.com.
About ErisX
ErisX Futures are offered through Eris Exchange, LLC, a
Commodity Futures Trading Commission (CFTC) registered Designated
Contract Market (DCM) and Eris Clearing, LLC, a registered
Derivatives Clearing Organization (DCO). The CFTC does not have
regulatory oversight authority over virtual currency products
including spot market trading of virtual currencies. ErisX Spot
Market is not licensed, approved or registered with the CFTC and
transactions on the ErisX Spot Market are not subject to CFTC
rules, regulations or regulatory oversight. ErisX Spot Market is
offered through Eris Clearing, LLC, which is licensed to engage in
virtual currency business activity by the New York State Department of Financial
Services and holds licenses in other U.S. states and territories.
https://www.Erisx.com/disclaimer/
ErisX offers individuals and institutions a single, innovative
platform to access crypto spot and futures markets. By combining
professional tools, advanced technology, sophisticated regulatory
oversight, and a diverse product set, ErisX offers compliant,
capital markets friendly workflows to digital market participants.
Backed by some of the world's largest trading firms and financial
institutions, ErisX brings transparency and reliability to the
digital asset class. ErisX, Eris Exchange, and the ErisX and Eris
Exchange logos are trademarks of the Eris Exchange group of
companies.
Cboe Media
Contact
|
ErisX Media
Contact
|
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Cboe Analyst
Contact
|
Angela
Tu
|
Jessica
Darmoni
|
|
Kenneth Hill,
CFA
|
|
+1-646-856-8734
|
+1-312-756-8716
|
|
+1-312-786-7559
|
|
atu@cboe.com
|
Jessica.darmoni@erisx.com
|
|
khill@cboe.com
|
|
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Information
This press release contains forward-looking statements within
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that involve a number of risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "might,"
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are only predictions based on our current expectations and
projections about future events. There are important factors that
could cause our actual results, level of activity, performance or
achievements to differ materially from those expressed or implied
by the forward-looking statements.
We operate in a very competitive and rapidly changing
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can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements.
Some factors that could cause actual results to differ include:
the satisfaction of the conditions precedent to the consummation of
the proposed transaction, including, without limitation, the
receipt of regulatory approvals on the terms desired or
anticipated; the impact of the novel coronavirus ("COVID-19")
pandemic, including changes to trading behavior broadly in the
market; the loss of our right to exclusively list and trade certain
index options and futures products; economic, political and market
conditions; compliance with legal and regulatory obligations; price
competition and consolidation in our industry; decreases in trading
or clearing volumes, market data fees or a shift in the mix of
products traded on our exchanges; legislative or regulatory
changes; our ability to protect our systems and communication
networks from security risks, cybersecurity risks, insider threats
and unauthorized disclosure of confidential information; increasing
competition by foreign and domestic entities; our dependence on and
exposure to risk from third parties; fluctuations to currency
exchange rates; our index providers' ability to maintain the
quality and integrity of their indices and to perform under our
agreements; our ability to operate our business without violating
the intellectual property rights of others and the costs associated
with protecting our intellectual property rights; our ability to
attract and retain skilled management and other personnel; our
ability to minimize the risks, including our credit and default
risks, associated with operating a European clearinghouse; our
ability to accommodate trading and clearing volume and transaction
traffic, including significant increases, without failure or
degradation of performance of our systems; misconduct by those who
use our markets or our products or for whom we clear transactions;
challenges to our use of open source software code; our ability to
meet our compliance obligations, including managing potential
conflicts between our regulatory responsibilities and our
for-profit status; our ability to maintain BIDS Trading as an
independently managed and operated trading venue, separate from and
not integrated with our registered national securities exchanges;
damage to our reputation; the ability of our compliance and risk
management methods to effectively monitor and manage our risks; our
ability to manage our growth and strategic acquisitions or
alliances effectively; restrictions imposed by our debt obligations
and our ability to make payments on or refinance our debt
obligations; our ability to maintain an investment grade credit
rating; impairment of our goodwill, long-lived assets, investments
or intangible assets; and the accuracy of our estimates and
expectations. More detailed information about factors that may
affect our actual results to differ may be found in our filings
with the SEC, including in our Annual Report on Form 10-K for the
year ended December 31, 2020 and
other filings made from time to time with the SEC.
We do not undertake, and we expressly disclaim, any duty to
update any forward-looking statement whether as a result of new
information, future events or otherwise, except as required by law.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof.
1 Source: 2021 Institutional Investor Digital
Asset Study, Fidelity Digital Assets
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